Early Indications

It looks like we have more market discord which some try to play up as rotation, but sectors should rotate, to me degree because of that certain averages with more exposure to certain sectors may have some difference in relative performance, but the difference in relative performance shouldn't be as wild as it has been lately, although I can understand why the NDX has been a massive out-performer, it's for the same reason that I had said the SPX wouldn't see any meaningful downside until the very clear resistance range it had created was flushed out with a head fake, the Q's/NDX were the same situation.

NDX daily chart. Remember a lot of what Wall Street does is set up situations in which they know how Technical traders will react and then take advantage of that. The resistance and very clear at that on one of the most watched indexes in the world, is a pretty simple thing to spot and I'm guessing just about every one of you know how Technical traders would react to a break above that resistance. As with any kind of head fake move, they have a purpose and to fulfill that purpose, they have to be convincing, the beauty of all of this for Wall St. is they barely have to do anything unlike days of old in which you'd actually see larger sums of money come in to set up a bounce, they'd push the market with capital and then sell in to it in much bigger size. Even if you listen to that Cramer interview on how he manipulated the market as a fund manager years ago, he would invest $8 to $10 minion to manipulate one stock and that was just one fund.

Times have changed, Wall St. barely needs to do anything in a situation like this, the short squeeze which costs them nothing other than pushing the NDX above resistance initially, does all the work, but there';s a big difference between accumulation/support and a short squeeze.

The breadth of this move as shown yesterday is horrible. I read some statistics I was forwarded by a member, in something like 6657 up days in the SPX since 1965, Friday had the 6627 worst breadth, the NASDAQ you saw with the equal weight index comparison and I posted the SPX vs its equal weight last night, all you can say is ugly and ugly is not just an adjective, it becomes a verb in the market.

In any case, here's the opening indications. Note the difference in the Q's (deterioration) vs the IWM especially.

 SPY intraday this morning giving up some early gains.

 SPY trend from the start of the bounce, there's a clear change in character.

The QQQ is mostly in line this morning, but the recent trend is what is interesting.

 The 3 min chart with a clean leading negative divergence.

 And take out the noise with a 15 min chart and the trend of a cycle is very clear with a strong leading negative divergence, The Q's look to be cooked up here, which is why I like QQQ short positions in the area.

 As for the IWM, this is something that was obvious in futures yesterday. The IWM has been a pretty massive under-performer along with transports over the last week, so every dog gets its day in the sun and this is why I  didn't add to IWM short positions yesterday, I suspect I can get a better entry and the entry right now with the way it has acted over the last several days would not be an edge, it would be chasing or mediocre at best. I want every edge I can get, even if that means once in a while I miss the trade. Over the long haul of hundreds of trades and many years, I think you'll be glad to miss a few trades in order to get the best edge possible.

 Just looking at the IWM's price chart I can see something is going on with a set up for a very near term bounce off this support level.

 And this is the same 5 min chart of the IWM I posted yesterday with a relative positive divergence. It's not as strong as it looks, which is because of the very deep leading negative divergence before and as price was swinging down.

Please do NOTE the small head fake move at the start of the bounce base to the far left at the yellow arrow. I talk about these being in every timeframe, but I think people just miss them and don't see them as significant. That was a run of the stops and pulling in new shorts as it broke support, the minute it crossed back above former support/then resistance, the short squeeze of new shorts began giving the IWM a kick start and retail chasing does the rest. The point is, if you look, you'll see these head fake moves all of the time, or about 80% of the time and they occur just before a reversal just like this one so, WHAT IS THE BEST USE OF THAT HEAD FAKE MOVE? 

In my opinion, so long as it can be confirmed which they almost always are, I'd use that to buy IWM calls for the bounce as you'd likely be getting them at some discount. 

NEVER BE CONTRARY FOR CONTRARY'S SAKE ALONE, YOU MUST HAVE AN EDGE. However if you have that edge, this may feel like a very risky trade, but it's actually a great entry and much lower risk. If you let your emotions and imagination replace objective data, your mind will paint dragons.

 And this is the same 5 min IWM chart's trend posted the last several days, the point of posting both charts is to show the highest probability which is the trend and the very short term probability which is a bounce. Between the two charts it's pretty easy to see the highest probability/lowest risk trade on an IWM bounce.

As for the bigger picture, like the Q's above, the 30 min IWM chart looks to have topped at the last bounce off the SPX 150 sma, and look at the divergences at both pivots. VERY ugly stuff, again additional objective data that tells me which way I want to trade ANY IWM strength, well not just any price strength, but when signals align and hopefully a worthwhile bounce.
As far as Index Futures, remember the 5 min chart is my timing prerequisite.

Look at the difference between the NDX and Russell 2000 Index futures on a 5 min chart (which moves a lot faster with futures)

 NQ 5 min very clear.

TF not so much.

Since I started putting this post together, the Q's and the rest of the market have dumped a bit, that's what I'd expect from a 5 min chart like the Q's above and the reason they were added to yesterday (puts),

Speaking of a clearer chart, here's the custom TICK trend indicator...

Since the start of the bounce... I have been posting the same chart and if you are good at spotting changes in ROC of TICK, you could see the deterioration clearly, now it's jumping off the chart.