Early Update

As expected Friday in the The Week Ahead post, the market isn't going anywhere on the upside without some work being done first. We are not down so much this morning that I would be looking for an intraday short term capitulation (selling event) that could lead to a bounce or even lateral movement to build some room for a bounce, although it is early.

TICK is as you might expect for price action this morning...

 We have a >-1000 reading this morning and slightly better than +500, there are no surprises here, nothing immediately suggesting an intraday flameout on the downside.

 The SPY 2 min intraday chart as shown last week is nearly perfectly in line with the downside and confirmation. There are some very short term charts that "could" provide a base for a bounce,  that work I said I thought would need to be done early this week if the market were going to see any upside.

For instance, the 1 min QQQ has what looks as if it could be an intraday positive divergence, but 3C needs to pivot up and lock it in, otherwise it's likely just to follow price lower, but this could be an early hint of that "work" that needs to be done, starting to happen. We'll know shortly.

However put the same chart in context on a slightly longer timeframe and you see it's really not much right now even if it does lock in.


And the long term charts or the charts of highest probability resolution are CLEARLY negative as they have been...

 SPY 60 min.

I do think the market "can" do the work, enough to get a bounce out of it, but as of now it has not and we've always known the probabilities were highly skewed to the downside, still it would be nice to get some additional positions in place and for that, for the most part with some exceptions, we need some kind of brief market price strength, although that would be all it is.

 Remember I said to keep this post, What High Yield credit is Screaming, in mind when considering any other analysis , either short term or longer term. You also know HYG is one of the first levers they'll reach for when trying to support the market. That being the case an HYG update seemed reasonable here as well, but again don't forget the post linked just above on HY Credit.

 This is HYG 15 min which is in line with the downtrend as it should be.

And HYG 60 min, much stronger and much uglier with downside confirmation, however...

HYG 1 min on the second day of a positive divergence. It seems someone is trying to give the market some footing, but again recall that even though this may look like an impressive divergence, it's only a 1 min intraday chart vs the very strong 15 and 60 min negatives above, however it "may" be enough to let the market find some temporary footing here soon.

I suspect we'd need to see an intraday capitulation event so keep an eye out for that too, look for large volume on a downside selling event.

I'll keep you updated.