MARKET UPDATE

I'm trying to stay patient and wait for the right timing and confirmation on the set-up I mentioned earlier from late Friday which happens to be IWM calls for a short term bounce, although you could probably use just about any of the market averages, although I think the R2K looks the best.

Earlier this morning I mentioned the support areas we are right at or close to as well as the SPX-200 day moving average. I expect we will slice through it like a hot-knife through butter, but very short term (and I don't mean short term like the July 10th bounce, but as in a day or so) the 200-day could easily act like a momentary speed bump. My sources on retail sentiment says they are crazy bullish as of Friday afternoon with the slogan being, "Buy the Dip", unfortunately for them, it may be the last time they utter that phrase as I'd estimate a full 50% have never seen a bear market considering 1/3rd of professional traders have never seen a rate hike which means they've never seen a bear market either.

In any case, for the moment I think I can afford to be patient and wait for something a bit closer to the set-up mentioned earlier or trade plan, this is why...

Daily Charts of the Averages...

 The daily SPY with a Doji Star candle right at the 200-day. I still think it will slice through it, but very near term technical traders see it as support and if they were buying the dip Friday, the addition of support at the 200 today will only increase that sentiment. I suspect we get something like a Star or Doji bullish reversal candle close right at the 200-day, which is why I think we probably have some time to let our set up come to us and verify it although,  I expect it to be a very short lived trade if it works.

 The DIA has something that could be a Star, a Doji or even perhaps a bullish daily Hammer candlestick reversal and its at some last ditch support. Note the entire July 10th bounce cycle has run through all 4 cycles and has retraced the entire bounce cycle as we were saying BEFORE the bounce even started, that it would be a "Risk off" bounce which meant the powers that be would use the opportunity to sell in to it which they did.

 The QQQ put in a head fake on the bottom side of a bullish "looking" ascending triangle, it's actually a bit large for a true bullish consolidation/continuation pattern, but that run of stops and dragging in new shorts which were later squeezed is part of the reason for head fakes, it generated the upside momentum that led to the next head fake above the triangle which traders bought thinking it was a breakout to a new trend higher, but it too has been revealed as we suspected, to be a head fake move giving us a Crazy Ivan shakeout on both sides of the price pattern. Note the Doji star (bullish upside reversal candle) on the daily chart today.

 And the IWM at some last ditch support from the March/May levels, also putting in what could be a star, Doji or even bullish hammer reversal candle on the daily chart.

This is why I suspect the set-up comes today, likely runs and may even end tomorrow before we resume back to the downside. This will depend on whether the charts continue to improve and how much they imp[rove if they can hold it. Any way you slice it though, we should end the current scenario with a clean break through support just below.

 The EUR/USD looks like it's going to see some downside which would support a bounce, but this is only a 1 min chart so it's not likely to lead much of a bounce for very long.

 The EUR/USD is really more important to the USD/JPY which would help the market more with a bounce, it too looks like it has started a small base area its working on for such a move.

 The 5 min $USDX chart is positive , although small, which fits with the two FX pair charts above.

 The Yen 3 min is negative locally which also fits with the USD/JPY short term expectations.

And the 10 min Euro has a larger trend in play, that's a positive to the upside, but it looks like that will pullback locally very soon, which doesn't ruin the base already started to the left, in fact it's likely to improve it.

In other words, the Euro chart is telling us the same thing all of the other charts are, the main trend in the market is more downside and it should get pretty intense once the 200-day is broken, but first a small market bounce as posted in the Week Ahead Friday is looking probable, but once again this small bounce would actually improve the charts for a larger, stronger downside move being everything to the upside in the market has been sold in to.

In any case, while I'm keeping an eye on the market for any possibility, I would think these daily candles give us the time to be patient and wait for the set up mentioned earlier to add to short term calls like the IWM trade idea from Friday as well as the opportunity to confirm that this still looks like a probability or even better, an improving probability.

We're already getting pretty close looking at the QQQ, SPY and IWM with the DIA not far behind.