Market Update

So the IWM call from yesterday, Trade Idea: Just For Fun is cute as a trade idea for fun, assuming you are playing it VERY speculative, kind of lie the 25 cent one arm bandits, they're fun with a $20 bill in your pocket, you didn't lose much, maybe you made something, there's quite a bit of adrenaline watching the trade,  these are all the wrong reasons to trade and this market is way too dangerous to be playing games. That's the kind of hubris that gets you carried out feet first so even though it was a speculative position, I decided that it's really a bad example to set.

As for the actual P/L, the 3C concept of the charts picking up where they left off, despite a Greek walkout on negotiation talks earlier today, played out, I think most traders went to the close yesterday expecting a gap down this morning.

 For a quick trade in this environment using July monthlies, it made nearly 7%, not spectacular by far, but for this mess this morning, I'm actually surprised it made anything.

 This is the IWM 3 min chart, this is about how far the positive divergence migrated yesterday/today.

When I decided to close the IWM call, which was always meant to be an intraday trade that I expected to close this morning, this is what started happening on the intraday 1 min charts of IWM...

 The white on the time axis is yesterday, the yellow is today, the leading negative divergence that quickly formed was the cue that it was time to pack up that IWM trade as this market is looking very dangerous and we already expect downside.

 The point of posting the 3 min chart at the top and this 2 min chart is the 1 min chart just above this is starting to fall apart, if it starts to get more serious and this divergence looks like it will be run over, this 2 min chart will go negative next and then the 3 min.

This is the QQQ 3 min, which is really no better than in line intraday and starting to deteriorate at the far right side.

This is why perspective and multiple timeframes, multiple views (not getting stuck in tunnel vision) are so important. This is the very same chart on a trend basis, meaning step back from the intraday view above and this is what you have...

Remember the bounce started off the June 15th lows which are highlighted in white and stage 1, with stage 2 mark-up in this mini-cycle and stage 3 top, obviously the divergence on this chart is far more dangerous than if you simply look at the intraday chart.

For another perspective, the SPY 2 min ...

 After yesterday's intraday negatives and downside, the late day positive started forming and its out to the 2 min mark.

Looking at the 3 min chart there's no positive divergence in the area, it didn't migrate out that far.

However like the QQQ chart above, the in line nature of intraday trade on the 3 min chart is deceiving, this is the danger of watching the market too closely.

Back out once again with the exact same chart and timeframe and the trend has not only been overall negative, but as you can see I labelled this mini cycle that started on the 15th of June with the multiple stages : 1=base, 2=mark-up/rally, 3= top/distribution and 4= decline which the SPY is already in.

The depth of the negative divergence through this mini cycle is a lot worse than previous divergences on the chart and this is only looking at very near term action/trends.

As I said above, this is a very dangerous market.