Market Update-Patience Time

The The Week Ahead forecast from last Thursday started like this:

"It may be a little early for the week ahead post, but there's only so many outcomes and so far today it has looked (including the rest of this week), like there's a bounce set up and in place and a bounce early in to next week looks like the most probable outcome"

However, just before Thursday's Week Ahead forecast, I posted this a little over an hour before the Week Ahead and stuck to it the rest of the day, NOT Taking Any Additional Action FOR NOW

"In looking at the charts below, I have to remind you this is not a situation in which we weigh the pros against the cons and make a decision and take a position, that's an attitude that reflects the notion that there are only long or short positions, there are also stand aside positions and that's what I will do for the moment until/unless I get better data...Remember a high probability / low risk trade is not about probabilities alone, it's about high probabilities, charts that jump off the screen and can't be ignored, barring that you are just taking what you think are the best odds rather than excellent odds."

So far, after having just gone through the daily 80-100 Futures charts, I think there's a good probability of the bounce talked about last Thursday and today, but I still don't see short term charts that are screaming or jumping off the charts to the degree in which I would view the charts' and/or the timing to be pristine. In effect, not much has changed since Thursday afternoon's NOT Taking Any Additional Action FOR NOW in which my plan was to wait until there are strong enough charts or not, to decide to take on new positions or continue to stand aside.

After having gone through all of the futures (I haven't made it to Leading Indicators yet, but I will and update those as well) and the market averages, my feeling is we have something going on in the area, but it's not at an area in which timing probabilities as well as the stronger divergences needed to lock in a high probability/low risk trade are present yet. Thus it looks like we are in the middle of a short term transition period leading toward a bounce, however as I said above and Thursday, it doesn't look like we are at an area yet that gives us the high probability/low risk part of the trade idea equation.

For instance...

 SPY 1 min intraday is "BLAH", close to in line, not showing the accumulation that I'd want to see to enter a new or add-to bounce position.

The SPY 3 min chart is showing essentially the same thing, it looks like price is working its way down toward the SPX-200 day moving average where a head fake or some kind of daily closing bullish reversal candle would seal the bounce story and give us a high probability, short term bounce, otherwise things seem a bit slow and there's not a high probability short term set up in place yet.

In fact, until there is, there's very little reason to believe that we can't or won't just slice right through the 200-day on a move lower, although I don't think that is a probability at this moment, until we have the divergence locked in, it's a possibility and one worth staying on the sidelines until the short term market charts have straightened out.

The longer term SPY 5 min shows the basic area in which a bounce/base looks to be forming, although clearly not done at this point.

And the longer 10 min SPY chart shows the same. Near term, these charts tell us that a bounce in the early part of this week or at least starting in the early part of this week is the highest probability, but until the short term charts are onboard, we are at the same place as Thursday when I posted,  NOT Taking Any Additional Action FOR NOW.

 The 1 min QQQ is showing the same bit of negative or in line type activity, not the high probability timing indications yet.

As is the QQQ 2 min chart

The QQQQ 10 min chart shows the area where it looks like a bounce base is trying to form and it's in the area of the SPX-500's 200-day m.a.

The intraday IWM 1 min is in line to slightly positive, not jumping off the screen yet though.

However the 30 min chart as well as others, show something going on in this area for a short term bounce, it's not extremely well developed this far out on a 30 min chart, but the fact it's even starting to migrate this far tells us this is there highest near term probability, the timing just isn't there, the work is just not complete yet to give us a high probability/low risk trade. Probabilities are there, but not high probability, low risk, excellent timing probabilities, otherwise known as the standard for taking a trade.

After having gone through all the futures including Index futures and in 9 time frames, I see the same thing as well as additional information.

 ES 1 min looks similar to the averages, it's a bit negative intraday and price action makes perfect sense with the intraday 3C chart above, but not an entry.

The Russell 2000 futures look a bit better just as the 1 min IWM chart did above, they are in line, but not leading positive or screaming for a trade opening yet.

As we get out a bit further to the 7 min ES chart, like the averages, we see something is going on in the area, the same thing we saw last Thursday, it's just not matured and in doing so, reducing risk, It does look like a head fake move has been accumulated which is interesting and a probability of a bounce, still timing is the issue as seen on the shorter term intraday charts.

The 10 min NASDAQ 100 futures also show the same thing as R2K futures or ES futures or the averages on slightly longer charts above, there's a high probability of a bounce trade setting up in the area.

It may be a bit easier to understand looking at intraday breadth, the NYSE TICK...

 This is the trend for the day today, down and hitting some extremes under -1250 to more than -1500, which is the kind of intraday flameout or capitulation that can help build a short term oversold bounce condition.

Our custom TICK/SPY indicator shows the same trend on the histogram, earlier strength faded and downside is the trend which fits with intraday charts, but doesn't rule out the chances or even probabilities of a decent bounce trade, maybe long ETFs or options, just not yet.

I know it's not the cool thing to say, it's not the exciting thing to say, but I think it's the right thing to say, I would try to stay patience and let the short term charts work themselves out and in the process strengthening the intermediate term charts.

Again, please don't take any thing out of context, a bounce is a bounce, you've seen the primary trend of the market with lower highs and lower lows which is a downtrend, even if it doesn't meet the financial media's definition of a bear market (being down -20%), we are certainly moving that way and look to be very early in the primary trend reversal process or stage 4 with 2009 being stage 1, in other words a primary bull market in the transitional stage moving toward a primary bear market.