Opening Indications

Typically when we have a divergence left off at the close we see price action the next day pick up where that divergence left off, however what the charts are depicting right now is the process of distribution or in my vernacular, migration of a divergence as all new divergences start on the earliest timeframe such as 1 min. and if they are strong enough, they move to the next timeframe, if the trend of accumulation or distribution producing the divergence continues and gets stronger, then they move to the next timeframe. This was the case all through yesterday...

 SPY 1 min started off as a shallow divergence , but kept building yesterday moving to the next longest timeframe of 2 mins.

And the 2 min chart deteriorated in to a sharp leading negative divergence which migrated over to the next timeframe at the 3 min chart.

SPY 3 min from yesterday.

Since the divergence that fueled this move reached out to the 5 min chart, that's the chart considered to be the one that needs to turn south as the process of migration , or strengthen of the divergence continues which it nearly always does.

The 5 min chart showing the positive divergence and the reason we expected a break above the SPX 100-day moving average, but it is still on a rather sharp "V" shaped bottom, it has a bit more stability than a true "V" bottom with an inverse H&S price pattern, but not very big at all and the 5 min chart has turned negative or has deteriorated, when it looks similar to the 1-3 min charts above, that's where this move should collapse. Just like there's a reversal process on the bottom , there's a reversal process on the top a majority of the time so I'd expect that as well, which is part of the reason I have suspected the market would not move down before tomorrow's options expiration.

Yesterday I drew in a possible scenario for the SPX daily chart and what it would look like in the Market Update-Futures post, this is the actual chart from that post yesterday...

The yellow candle is a representation of what I suspect we may see, remember this was drawn on the SPX daily chart yesterday so i represents the future or today. So far it's early and the market does not look like a Star or Doji star and ultimately it won't look exactly like this, but the prerequisites for the idea are there, the move up (although not quite the same gap), higher intraday highs which are needed to form the upper wick.

Keep an eye on the NYSE intraday TICK...

 NYSE 1 min TICK

Custom TICK Indicator showing the histogram weakening.

Yesterday at 11:34 I posted, Intraday Capitulation which is like a mass buying exhaustion event. Interestingly, the market was flat through the rest of the afternoon, not surpassing that high from the morning as the short squeeze ran out of gas.

So far there's nothing very interesting in the market's behavior considering a break above the 100-day and what such a counter trend move is supposed to look like, but there are interesting overall signals/charts...

 Remember, for a counter trend bounce you need a trend down. The yellow box to the far left is the head fake move we said would fail above various triangles in the major averages, large ones. The trend since then has been down for nearly 3 trading weeks (2-days short of 3 weeks), so a counter trend bounce will be strong, that in itself tells us something about the trend of the market and the condition it is in. However maybe the more interesting signal is the fact there's no confirmation whatsoever when the trend of an intraday chart is followed. There wasn't a very large base area, thus there wasn't very much time for shares to be accumulated for the move even had they wanted them.

At this point I'd say it's just letting the process finish just as the Counter trend bounce in the $USD...

This $USD counter trend bounce is a very different animal, the yellow arrow is the counter trend move, the strongest 7-day move in the $USD in over 7 years, despite bull markets, it was the downtrend/counter trend bounce that was stronger than any move up in the $USD preceding it. After the 7-day bounce, there was about a 4-day reversal process and it has been moving back down to where I believe it will continue its primary downtrend.

Again, while a very different animal, a larger counter trend move, the concept is the same, the strength of the move is the same, and the ending is the same.