Market's Bigger Picture

I don't want to get "Lost in the lines" or represent the market as an intraday affair, there's a much bigger picture at hand and in play and we need to be aware of that as all shorter term charts are meant to be used to allow us to position for the larger trend.

If we go back to the April 2nd Market forecast with AAPL as a proxy for the market simply because it had the clearest triangle which I suspected was the play the market was setting up  for a head fake move, IMPORTANT: AAPL Set-up & Market Movement,  this is what the SPX looked like at that point...

 As of April 2nd's forecast linked above I was looking for market triangles, we got even clearer triangles since 4/2 like the SPX's "bullish looking" Ascending Triangle.

We were looking for a false breakout above those triangles and for that breakout to fail and the reason we already expected the breakout to be a head fake over a month before it began were the long term charts with the highest probability resolution, charts like this daily ES (SPX E-mini futures)...

By April 2nd we already had the highest probability resolution for the big picture in the market with this ES daily chart's leading negative divergence.

The head fake concept is very strong which made it pretty easy to forecast ad we had proof that the triangles up to that point had already shown us that they were not random or naturally occurring, but engineered as the 3C divergences proved. To create a bullish looking ascending triangle, there's really only one reason and that's to get retail chasing it, but with the chart above and others, we knew how it would end before it even started. 

Here's what has happened since.

The SPX formed a larger ascending triangle and did make a head fake/false breakout above the range. We confirmed distribution in to the move and it did fail as forecasted on 4/2.

We even expected a move down to the 100-day moving average in yellow and this is where I think the market is in trouble and at a very dangerous crossroads...

While I usually expect some kind of game playing around the average, maybe even a little bounce, you've seen how bad the charts look. This 100-day (yellow m.a.) has held numerous times as support, but since we have a head fake move in on the daily chart above, I suspect this time it will fail.

 This is the 60 min SPY chart and the head fake/false breakout area is in the yellow box, note what 3C did in the area and since confirming the head fake move or false breakout.

And the daily chart pretty much ends the debate.

Interestingly, as you might recall on Friday I said you can't consider any analysis without considering the HY Credit analysis as it is key to the market, that would be this post with the HY Credit analysis, What High Yield credit is Screaming

 Along those lines, this is HYG's daily 3C chart, leading negative on the strongest timeframe we generally use.

In addition, as a Leading Indicator, not only has it broken down on a big picture basis...

High Yield Corp. Credit (red) vs. the SPX (green) on a daily chart, especially from mid-2014 through 2015.

HY Credit has broken down on the intermediate and shorter term timing charts.

The SPX again is sitting at the 100-day...

Actually the SPX has broken below it intraday today, but there's usually some short term game playing around these moving averages that are seen as key.


While I hope we do get a decent bounce to add some nice positions that need it (take NFLX or Transports as I have recently posted them as trade set-ups), there's big trouble right ahead.

 The intraday charts are still looking like they want to bounce in the area or find some toe-hold. It may take a big stop-run on fear selling as the SPX breaks the 100-day, you can see volume picking up in SPY as it did.

The VXX which trades opposite the market is showing a short term 1 min negative divergence suggesting intraday to may come down and the market may see some VERY near term support, but it would still have a lot of work to do even with that.

TICK shows it's not out of the question that the market does some of that work...

As this morning's 1 min downtrend is being broken , but not screaming, I certainly wouldn't be bullish.

And this is still the reason why...

 The SPY 2 min chart is still confirming downside and hasn't seen any positive divergence migration. Right now this is not looking good for the market.

 VXX 2 min is not going negative on its 2 min chart so whatever the market has done on the positive side today, it's not the work I said it would have to do on Friday, it's skin deep.

That may change with a nice run on stops and offer the market a brief reprieve, the thing is, it could just as well go the other way.

The longer term VXX 10-15 min charts have been pointing to someone buying a lot of protection.

The point is...just don't get lost in the lines, keep the bigger picture in focus.