The closing intraday 3C signals from Friday as seen in the
The Daily Wrap (SPY, QQQ & IWM) all suggested price action pick up where it left off this morning on the cash open (3C negative divergences/distribution from Friday) which is a concept we have seen work over and over whether the very next trading day or even over 3-day weekends.
The Igloo/Chimney
(top and head fake signal before a serious trend reversal) also seem to be in place with the Igloo/top not quite done on the downside before the head fake
(chimney) after the Igloo/top is put in, but just before a serious trend change. Thus the intraday support building in. This is why I saw no reason to sit through a correction with time sensitive options when we can most probably take the gains now and re-enter them at better prices with more appropriate expirations/strikes, especially for the IWM expiration which was meant to be a short term position with June 5th expiration
(usually about 3-4 times more expiration than I think I'll need and in the money).
As mentioned and shown in the
A.M. Update this morning, just as we saw last week, it seems like the Durable Goods print was leaked ahead of time like so many recent Economic Data prints.
The IWM June 19th $124 Puts P/L...
The IWM puts were at a small gain of +6.3%, but I see no reason to sit through a consolidation in these time sensitive options when we should have an opportunity to re-enter them at a better area near term.
The IWM 3 min intraday shows a bullish reversal candle on higher volume this morning at the white arrow, often indicative of an intraday Flame-out or near term capitulation/selling event.
The 1 min 3C intraday IWM chart also shows an intraday positive divergence at those lows suggesting its looking for an intraday low to get a toe-hold which it seems to have found for the moment.
The QQQ June 5th $111 Puts... Entered Thursday for a near term quick trade, Trade Idea: SPECULATIVE QQQ Puts
At a cost of $1.20 and a fill of $2.20, these puts showed a nice gain of +83% for less than 2-days of market exposure.
The intraday "Flame-Out" or short term capitulation/selling event on higher volume and a bullish "Star" reversal candle.
The higher volume is key as it makes the candlestick signal about 3 to 4 times more effective than without the volume and this applies to any timeframe whether intraday , daily, weekly or even monthly.
The QQQ 3 min intraday chart showing the negative divergence in the Q's in to Friday's close with the 3C charts and price picking up where they left off on Friday upon the cash market open the next trading day. THIS CONCEPT WOORKS MOST OF THE TIME, EVEN OVER A 3-DAY WEEKEND.
Note this morning's leading positive divergence, still just an intraday signal so not something I'm terribly crazy about trading long, but it may serve as a nice set-up for the next shorter term short/options (Put) position. I'd much rather let the trade come to us.
SPY CHARTS... (as we had no position in the SPY-at least not in the tracking portfolio-although I suspect a few of you did enter SPY puts from emails I received last week).
The 1 min SPY intraday chart with a leading negative divergence at the close on Friday and price action picking up where Friday's 3C charts closed on Friday with heavy intraday distribution.
This morning you can see an intraday leading positive divergence suggesting an intraday base and bounce attempt coming shortly as a lateral intraday price range has formed.
However the much stronger 5 min 3C chart is showing a strong negative divergence through Friday and a leading negative divergence today, suggesting any short term intraday charts are just a minor intraday movement that we should be able to use to set up new short term positions and hopefully some longer term short positions.
Again the stronger 10 min 3C chart shows the same accumulation area as we see in nearly every chart we look at whether equities, commodities, currencies (
some inverse-distribution like VXX) on the 6th and 7th, just a day before the "Bounce" forecast of May 8th and distribution in to that bounce which is clearly seen starting in to higher prices almost immediately and now the 10 min charts, the "Gas in the tank" charts which the positive divergences went out to on the 6th and 7th are falling apart and starting to lead lower as I have been waiting to see before entering new longer term short positions in size.
The longer 30 min chart and cycle with a "W" base back in March that is now leading negative as this move has come to its end. This was the "Triangles" breakout we had been looking for which were showing good timing for a move at the 6th and 7th positive divergence with distribution in to the move above resistance or the breakout level where technical traders will chase price and provide demand that smart money can sell in to.
As for Index futures...
ES 1 min with a clear negative divergence in to the 8:30 Eco-Data as well as the 9:30 open
(green arrow) with the intraday positives since as seen above on the SPY, QQQ and IWM
(averages).
NQ/NASDAQ 100 Futures showing a clear negative in an overnight range and in to the 9:30 cash open
(green) with the same intraday positives forming here as well as the market averages.
And TF/Russell 2000 Futures showing a confirmed downtrend
(green arrows moving down with price) as well as a leading negative divergence in to the cash open (9:30 at the vertical green arrow). Note the intraday positives since like all of the pother averages and Index Futures.
NYSE TICK Data
While not the normal TICK channel we'd normally look for, you can see a break below the channel at an intraday extreme
(red box) with an upside extreme of +1000.
Our custom TICK / SPY Indicator shows the intraday breadth situation a lot better...
SPY in green above and the custom NYSE TICK indicator showing the intraday capitulation at the lows and then improvement after,
this is generally where I want to be pout of put options before momentum starts to fade or reverse.
More to come...
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