Market Update

As posted Friday in The Week Ahead post/forecast, the gist of the idea was the attempt to finish the typical Igloo/Chimney top/head fake move, but as of the close Friday, unlike we often see with late day divergences that give guidance for price action early in the week, there were no divergences and I didn't expect any particular movement of any strength in either direction this morning or today until we observed new divergences that were not there as of the close Friday. For a quick recap, I'd just check out the linked post, The Week Ahead.

Taking a look at the charts this morning, I'm VERY happy we didn't take any new positions Friday for early this week as the price action is exactly as the charts would have suggested, rather "BLAH" and a bit choppy. We are still looking for near term divergences to see if the overall expectations of the Week Ahead forecast play out.

So far this is what we have...

 The NYSE intraday TICK Index has been volatile, but on both sides, +1250 and -1250, I suppose that's a net neutral for the moment, which is what I was suspected we'd see early in the week based on Friday's charts.

I captured charts of all of the averages, but I'm just going to use the SPY as a proxy to avoid the redundancy of posting an additional 12 charts that don't tell you anything more than the SPY. Remember, on Friday the key for this week was to watch the charts as they develop this week as there was so little (short term to go on). There are some conceptual opinions in the post for an Igloo/Chimney top pattern and the highest probability resolution at the bottom of the post reminds us that the 30-60 min Index futures charts are extremely negative so whatever noise happens between now and then, I don't suspect there will be much time for it with the Greek (likely) default coming Friday and it's pretty hard to argue with how negative those charts are.

We are essentially looking at the how, when and how we can use it to our advantage as far as very near term trade this week, the big picture seems fairly well set and that is down.

 1 min intraday SPY charts do show some minor negatives from last week and this morning's open which had no support and quickly sold off , then found some intraday support this morning (white), but nothing that is telling us much other than intraday price movements.

The 2 min chart shows more of the same, it really is nearly in line so again there aren't any strong near term trends developing at this point which is what we saw on Friday and why I felt it was best to just stand down until we do have high probability near term signals.

The 5 min chart which is the strongest of the above so far shows the distribution of Friday the 22nd and the result of that the following trading day, May 26th. Then a positive at the lows of that gap down and that's really the last significant near term trade signals we've had.

However if you go back to the Week Ahead post you'll see the Igloo/Chimney top price pattern conceptually that is the highest probability. The Igloo Section/rounding top is already in place off the last short term cycle accumulation on M/ay 6th and 7th which we see market wide on the same 2 days. However the cycle looks like it is ending and getting ready for a sharp move lower not only because of the Igloo portion of the price pattern, but clearly the 3C distribution through it. The head fake chimney is the last thing I'd expect, but so far we haven't seen any near term charts strong enough to produce that move.

Until we have stronger charts, I'd remain patient, take the opportunities where we find them and let the market tell us when and where.

Unless of course you are taking the big picture view and that hasn't changed, the highest probability resolution to everything that has occurred on the charts above is represented on the longer term trend charts of the averages and Index futures such as...

 ES/SPX e-mini futures 60 min leading negative divergence...

Or an even stronger, big picture view of the market...

ES 1-day 3C chart. Note the sharp fall off (distribution ) in to the 2015 chop/range.

I'll let you know as soon as I see anything as to near term action.