The Week Ahead

The main event next week is probably a tie between the Greek drama that looks as it has always looked, like there's no happy ending, the question is , just like with Long Term Capital Management or Lehman, except now on a sovereign nation's stage rather than an investment bank/hedge fund..."What are the unforeseen consequences of a default?" Where will the market lead in strange and unpredictably surprising ways. I was very serious when I said this morning that this kind of event "could" trigger a war in Europe between those in the leftist camp like Spain's break-away Catalonia region, Portugal, Ireland, etc. If there's any kind of positive Greek outcome from exiting the Euro, the EU will literally fall apart before our eyes and there are too many interests to protect so going to war against those who would tear the EU apart from within is not as absurd as it first sounds.

the point really being, WE DON NOT HAVE ANY IDEA HOW THE WORLD CHANGES WHEN A BUTTERFLY FLAPS ITS WINGS IN GREECE.

OF COURSE THE "OTHER" MAIN EVENT IFS THE TUESDAY/WEDNESDAY F_O_M_C MEETING. I know consensus is moved up and at a September hike, but for numerous reasons, I would not be surprised in the least if there were a June hike. While the talking head half of Wall Street may be surprised or feign surprised, I doubt true smart money would be surprised either.

As for the market, remember the April 2nd forecast?

 At #1, a week or two before the April 2nd market forecast I stated (paraphrased) "The market won't see any significant downside until it first makes a head fake move to the upside as there is enough clear resistance to warrant such a move, however I fully expect it to fail".

By the April 2nd forecast we had narrowed down the actual scenario to large market triangles like the SPX one on a daily chart above and the head fake/false breakout would be above those triangles to new highs, but it would not last and be revealed as a false breakout/head fake move which has happened at the yellow box at #2. Note how quickly a head fake move, one of our best price-based timing indications, sharply turns to the downside at the red arrow with 2.5 trading weeks of downtrend until we hit the 100 day moving average at #3 in which I expected to see some short term support as of the April 2nd forecast, but then a slice below that and then the same at the 200-day and then a break to new lows below the October 2014 lows.

Note that so far, the daily candle at #4 looks exactly as I drew it earlier today in Early Indications, this is the actual chart from that post...

So far, a spitting image of the actual SPX daily candle and this after yesterday's closing candle was accurately forecasted a day in advance. This forms a candlestick downside reversal with confirmation so far today. Thus despite any short term gap fill bounces notwithstanding, obviously I expect further downside in to next week.

So far, EVERYTHING forecasted on April 2nd has come to pass.

 The head fake move's cycle was accumulated market wide from April 5th to the 7th seen to the left, the rounding igloo/chimney top more or less played out, the head fake move played out with strong 3C distribution on this SPY 15 min chart and the most recent corrective , Crazy Ivan shakeout hitting the shorts and longs on both sides of the 100-day m.a. with a clear leading negative divergence. Thus this is the move expected as we moved lower in the April 2nd forecast and the adjustments to it as we moved forward with additional/new signals.

There's still some very short term support at the 100-day as we have not sliced through it today and there are some small gaps from today and the market has been ruthless about filling them. I can't say for sure whether they are filled as the charts that looked like they might earlier today, have seen deterioration.

I would think the market would be rather flat in to the F_O_M_C and then beware the knee jerk reaction, it is hardly ever right and usually retraced whether it is up or down, even though more recent knee jerk moves have been less severe for the F_O_M_C.

Leading Indicators can't be taken out of the equation , here's their most recent/complete update...Leading Indicators Not Helpful For the Market's Bulls

However one of the most telling things I've seen may indeed be the reach for protection, VIX futures on a strong 30 min chart...

VIX 30 min futures leading and it looks like a head fake move, these are seen just before trend reversals (up).

We will continue to enter positions where we can at the best set ups like XLF/Financials today and core shorts will remain in place.

Other than that, I don't want or need to chase anything, counter trend moves will create those opportunities if a little patience is shown.

More to come after the close, but I believe we are well on our way to making anew primary trend lower low (below the Oct. 2014 lows).