Friday's Bounce Indications

This is something we have seen over and over again, "Price tone dictates perceptions" and we know the market is ruled by perception.

Friday, before the The Week Ahead post suggesting early week/Monday upside, we saw what looked like a possible bounce for later Friday building on a 1 min positive divergence on the SPY 3C charts especially... From Friday here are several of the posts dealing with that divergence:

The first clue of a positive divergence starting to build intraday Friday, Quick Market Update

By 1:15 the divergence was strong enough to make an intraday bounce look probable, which would normally be expected after 2 pm on an options expiration Friday the most probable course (normally)...Intraday Bounce Likely

At 1:30 the charts of QQQ, SPY and TICK were featured on this post, Intraday Bounce Likely Building

Around 1:45 an expected probability of a market bounce would help the VXX possible trade as a pullback would help widen its reversal process, but all in all it still looked/looks good, VXX - VIX Futures

By 2:15, I had to prepare the Week Ahead post and posted, Quick Market Update Before I Go Through Charts...

And then of course, The Week Ahead post, having had watched the Friday intraday positive divergence build with no movement, the concept of...

"As for short term charts, I don't think anything overcomes the news and we really don't know what the news is going to be. However thus far I have not put out the VXX long call/add-to call, one of the reasons is this SPY chart (1 min), if we close like this then the concept of 3C charts picking up where they left off kicks in and the most probable outcome would be some early week/Monday market strength"

I doubt VERY much that anyone in the market knew what Greece would propose or how it would be received, they just knew that with a meeting coming up Monday morning of the EuroGroup Finance Ministers and a possible later meeting of higher leadership, that Greece was very unlikely to default before Monday morning. 

 Last Thursday's SPY negative divergence leading to Friday's opening gap down...

Then Friday's afternoon divergence ending the day with a SPY positive meant the most likely concept in to the new week was a bounce as 3C chart's divergences tend to pick up where they left off , even over a long weekend.

Whether anyone knew what would happen in Greece or knows what will happen, really didn't matter for very early trade so long as the meeting was ongoing. What they did know was there was a gap to fill from Friday's gap down and above you see today's gap up in the area of Friday's gap.

To make things easier to see, this 2 min SPY 3C chart shows multiple smaller divergences including Friday afternoons that picked up this morning where it closed on Friday, with a short term positive divergence and a move in to the gap.

Therefore, I doubt this is about inside information as of Friday on the outcome of Greece and had more to do with "Greece can't default or be dead in the water during the middle of a EuroGroup meeting this morning and there's that gap from Friday that is an obvious gap-fill target.

Thus all of the nonsense about sentiment being bullish for a Greek resolution is just that, no one could possibly know what the outcome of today would be or will be, they just knew there wouldn't be an end to Greece Monday morning, thus price action, set up late Friday for early in the week, set the perceptions.

Remember the rest of the charts from the The Week Ahead forecast were not looking good, the forecast as of Friday afternoon for the week was, 

"...the most probable outcome would be some early week/Monday market strength, but this is largely the SPY with little confirmation in the other averages. I suspected this would lead to an end of day bounce, but it's looking more like early next week/Monday morning price action."

Now we'll just have to see where the news and the charts go from here.