Early Indications

Yesterday I didn't see the upside or reversal process as being complete, in fact I said numerous times that I believe we are in the reversal process, but remember that it is a process and not an event.

This morning in the A.M. Update I mentioned that the overnight ES chart had a divergence that would likely show us some intraday weakness, perhaps around the European open, the ES chart that now looks like this.

Which is to say its upside has suddenly turned in to a choppy range since the cash open.

As you know I like to check the open on days like today and see whether or not there's confirmation of the gap, usually it's almost immediate, but I give it an hour or so just in case.

 So far in the intraday SPY there's no upside confirmation

 Nor is there in the Q's so far

Or the IWM.

However you may recall yesterday's post, GLD, SQQQ & Head Fakes in which I showed or drew in what the most probable topping process looks like with the highest probability head fake move and what that looks like in the recent past vs. what we had yesterday which was a very narrow reversal process which was not proportional to the preceding reversal or trend and did not have a head fake move, this is an actual example chart from the post linked above of what the Igloo/Chimney reversal process with a head fake move looks like in very mellow head fakes, which I also noted are often stronger than the examples on the chart below.

 Note the rounding Igloo top and then the Chimney which is the head fake at the last two previous tops and as of yesterday, our rounding process, but no head fake and a bit too tight meaning the process likely needed a little more time to broaden out.

As of this morning, here's what it now looks like in the IWM and more extreme in the other averages which is fine.

IWM 60 min chart. Hmmm. it looks like this concept is in play a majority of the time and there's a good reasons for that, it's called a Head Fake.

As to the rest of the market, the initial divergence pre-market in ES tells us that there's not much confirmation, the charts of the averages above tell us the same which tells us that this is very likely a head fake move and thus a very useful move, although there's still more chart evidence that needs to build as to timing.

 This is the NYSE intraday TICK since the open, a nice strong pop on the open, but deterioration since.

And the TICK custom indicate that showed the probability of more upside late yesterday is deteriorating this morning.

All of this pointing to a head fake move and the reversal process starting to mature. Although we have to watch the charts for the best timing as to when a head fake move goes from the upside excitement to the downside pivot, at least we've made it there just like the past several bounce tops, just like we see about 80% of the time in all reversals and as a reminder...

The head fake move is one of the best price-based timing indications we have for a turn in the market as they tend to appear JUST preceding a reversal.