Market Update

This morning in the A.M. Update I thought the overnight gains in Index futures (like yesterday) would not hold, there are multiple , stronger charts shown in the update that are showing negative divergences in to the overnight move (3C distribution).

"I don't think this holds, and I still believe we are going lower. Whether or not the market can put together a base tech and support something more than this chop remains to be seen."

Seeming much like yesterday, it looks like they will not hold. The market averages look like this currently...

 SPY intraday, yesterday you may recall the SPY 1 min was largely in line with price, it was the slightly longer charts showing it would lose the overnight gains. Today that's not the case.

 Speaking of those slightly longer charts, the intraday 2 min SPY is also negative here.

 As is the intraday 1 min IWM

 And worse the IWM 2 min, much like the Index futures in this morning's A.M. Update.

 QQQ 1 min which was negative right off the open yesterday and then in line the rest of the day and negative this morning.

 As well as a seemingly strengthening divergence on the QQQ 2 min like the IWM 2 min which was also negative yesterday and worse today.

This is a very odd week. Our The Week Ahead forecast from last Friday afternoon called for the following...

"I believe  we will see early weakness on Monday. HOWEVER THIS PART OF THE FORECAST IS NEAR MEANINGLESS COMPARED TO THE REST SO I WOULD NOT GET TOO HUNG UP ON THAT.

I'm still expecting a $USDX led bounce in the equity market as well as the bond market, certain stocks are going to be shorts before others, but this gives us a chance to open or add to any positions we may want to tweak a little.

As I have tried to make clear, it doesn't look like smart money is even participating in this move, thus my own participation level is so low at present having closed VXX puts today.

In comparison to what comes next, this bounce is nearly meaningless like Monday morning's forecast.

The main theme is strong market weakness and any chance we get to open or add to positions we like should be taken. There's simply no comparing the "bounce" charts (of the bounce expected) with those of the distribution and broad deterioration through all of 2015"

So to be clear, our forecast Friday afternoon for this week started with weakness early in the week...That weakness "should" have allowed the intraday short term charts to build better looking positive divergences for a mid-end week bounce higher which was based on charts like the one below, QQQ 10 min.

This QQQ 10 min was already in a positive position, but a frail one that needed early week weakness to strengthen a base area for a decent bounce. We did see early week weakness Monday and Tuesday morning as expected (red area), but not quite as weak and it didn't build a stronger base either.

The trend that will follow a bounce would be a significantly larger downside trend as two weeks ago we forecast we'd see price "Loiter" in the area of the triangles' upper trendily since the attempted breakout failed.

 The NDX's head fake/failed breakout we forecast in yellow and then the "Loitering" around the upper trend line in orange.

The SPX had a weaker attempted breakout/head fake move, but is also loitering in the area which is something we have observed before a large trend reversal, this happened in September after the head fake/failed breakout and between that point and the move to the October lows. Only this time it's on a much larger scale.

I had been looking forward to playing a bounce and then closing it out and moving to set up for the next trend, however, the base and the charts that should have strengthened early this week on initial market weakness, simply haven't.

At this point, I can't justify participating in any bounce that we might see coming as it was expected to take place around this time of the week, there's simply not the support necessary to hold it if it were able to get off the ground and that means a situation in which you could have a spectacular bounce one day and a gap down taking out 2 weeks of trade the next morning.

For now, I'll continue to take positions in the assets that are showing strong signals until this week's situation clears up.