Market Update

Well the charts are still given very small and sometimes ambiguous signals, here's what I see thus far...

When I explained my theory, I said the market would have to consolidate and accumulation would take place at levels near this white line. That's why it is so important to see how the market and 3C react in that area.

 DIA 1 min for intraday details is largely leading in position

 Looking closer it looks clear that there's been light accumulation at the lows and when price moves up a bit too high, they feed shares out (distribute) to move it lower. This isn't uncommon, but the signals are quite faint.

 The 5 min chart has less noise, more trend, you can see where recent higher levels saw negative divergences and a positive at lower levels.


 The 15 min which the DIA was the only one that looked more bearish yesterday, has improved today, its still in a bearish position, but there's improvement.

 The IWM and QQQ started out stronger after Tuesday/Wednesday's decline, they are seeing more negative divergences lately and deeper. One "possibility" is if Tech is to lead, then they'll want to accumulate tech as cheaply as possible, that's one scenario. This is the IWM 1 min.

 The 5 min shows the same, but there's some recent improvement.

 The 15 min IWM is showing lots of improvement.

 QQQ 1 min, again seeing more short term negative divergences, but it too was one of the better performers in at least filling the gap yesterday.

 The 3 min started off looking better than the SPY/DIA, as prices have risen, the negative divergences are bigger, it looks like this wants to pullback to the Wed. lows which is where we can gather the most useful information.

 QQQ 15 min overall is still not in a horrible place overall, the recent activity is more bullish than I would normally suspect. This is one of the reasons I believe it is probable that there's one more move higher.

 SPY 1 min showing negative divergences at the highs and positive at the lows, this is a much clearer signal then some others.

 On the 3 min where more of a trend shows up, we are seeing the same thing.

The 5 min is also showing the same, whereas the QQQ/IWM were stronger on the initial decline and DIA/SPY were much weaker, Now the SPY is seeing more relative underlying strength than the QQQ/IWM.

I'll keep digging, I need to look at AAPL especially.

ES Update

As you know I just got back from the doctor with my wife, she is still there, my mother came to stay with her as she doesn't understand complex English being from Hungary and there were some scary words being thrown out.

In any case, it will take me about 30 mins to get caught up on where we are at, but so far, price wise, we are pretty close to the scenario I mentioned, "A pullback to accumulate and a final blow off top push". Price is in the range where that could happen, like a doctor, I need to verify and rule out certain scenarios to find the most likely probability, which is what I'm in the middle of now.

For the time being, lets just take a quick look at ES

 I have to get caught up on the European action, but ES did rise from the EU open at the white arrow and saw a negative divergence in to the early morning, pre-market highs. ES also saw a small positive divergence just after the market open which is close to being in line with price.


The broad CONTEXT model which is an amalgamation of a bunch of different assets like Credit, currencies, rates, equity prices, etc is currently showing ES as overvalued as the model has dipped lower than ES has, this may be an early sign of some Wall Street support coming in to the market like we saw last week as the market started to lose its footing, Wall Street stepped in with some minimal support that we saw on the 3C charts and halted the slide and got the market to pop on Tuesday, this may be a similar scenario and would fit with the one theory I've already put out.

So I'm looking at the averages and the different time frames, I'll update you there shortly.

I'm finally Back

First Market Update coming soon

21 Emails!

I have 21 emails all dedicated to thoughts about my wife, some of them are from members who have been with me for 2 years and I've never seen an email from them. THANK YOU ALL for your thoughts, prayers and support.


Hopefully this can be taken care of at home, but it is really horrible to see a fit, young woman unable to finish a sentence for lack of breath.

Thank you all again for everything.

Closing Update

First of I appologize for having cut out early, my family physician said he wouldn't treat my wife unless she went to the emergency room and was admitted, suspecting she has Pneumonia.  Some of you may remember I had to leave after the market close a little over a week ago to take her to an emergency walk in clinic, the answer we got was Bronchitis, but her breathing is worse, to the point she sometimes can't finish a sentence, but there are other times she seems pretty normal, the doctor just happened to see her at her worst and her being nervous just made her breathing worse. He ran no X-rays (the X-ray from the last doctor was clear) so I don't know how he can make such a diagnosis.

The big problem is her insurance from work (PNRA) only covers $2000 a year! I didn't forget any zeros, 2 thousand dollars! She just got this insurance so I had not seen it until last week, I've never seen such a thing.

Because of her immigration situation, she can't have any outstanding public debts and she is coming up for her 2 year interview in a few months. My brother was in the hospital for 2 days and had a $22k bill! That leaves us with 1 option, she'd have to go back to Hungary were she'd have full health care coverage.

Needless to say we are getting a second opinion tomorrow morning. Thank you again for all of the letters of support and prayers, I can't imagine the feeling of not being able to breath-governemnts use that as torture. It's very hard to see my wife like this and be helpless.

Any way, looking at the closing charts, there's still ambiguity in the major averages although they are on the right track for the accumulation/pullback/accumulation/last price pop. However there's more than one interpretation of what was seen today, for instance, accumulation for simple gap fills.

One chart did standout today as being quite bullish looking and it just so happens to be the final component of my expectations that is yet to be met, AAPL.

I'll take you through the good, bad and ugly, just keep in mind we are really looking for any possible extra tactical advantage we may get from the market on a final blow-off move. Strategically, I've been building my short positions for some time in the model portfolio for equities and nearly all are at a gain, a few are just below break-even, but we haven't even seen the break yet.

Lets start with the averages...

 First the DIA and SPY intraday charts were the worst looking yesterday, today the DIA 1 min is one of the better looking charts, leading positive above the Tuesday rally 3C highs and the DIA didn't even fill the gap today.

 DIA 3 min shows some tailing off of 3C strength toward the end of the day, since the 1 min chart is strong, it must have started earlier in the day and the actual 3C readings would have been more bullish in to the close with the 1 min chart at the day's highs.

 The 5 min chart saw that same falling off after having been in line with price.  The scenario I mentioned lat night, if there is to be one final bullish move, would require the market to pullback from these levels and toward the lows where a small base could be formed in to 3C accumulation, so a downside price reversal (as long as it doesn't blow through today's lows) would actually be part of the plan.

The DIA 15 min chart is more bearish today than yesterday, even though intraday it followed the market, this is the exception though.

 IWM 1 min shows some impressive early strength and that trailed off to just about in line with price.

 The 3 min chart is nearly exactly the same description

And here's another 15 min chart that is stronger than it should be, a relative positive divergence on the open and a leading positive in to the close.

 QQQ short term intraday charts were pretty weak today.

 Here's an example of some initial early strength and the afternoon trailing off of the 3C strength-the Q's did fill the gap and that's when and where 3C started moving in to the negative.

 QQQ 5 min shows some of that earlier trailing off I mentioned in the DIA charts with some late day attempt at strength.

 Interestingly, the Q's 15 min chart wasn't only in a relative positive divergence at the lows today, 3C was higher than Tuesday's rally highs at the close. If there were distribution today, it would show up here and if they aren't distributing, they are supporting the market for another push in my opinion.

 SPY was in line most of the day with the afternoon trailing off and an attempt at some late day strength.

 The 5 min chart looks pretty much like the rest.

And once again the 15 min chart is stronger than it should be with a 3C close above Tuesday's rally 3C highs and the SPY did not fill the gap.

Although the market charts still leave some guess work to be done, the one thing that stands out is the positive 15 min charts, I was ver surprised to see that and I think it lends some credibility to the idea of one more strong blow-off move.

As for the 3 main sectors, Energy, Financials and Technology...

XLE Energy

 Yesterday I mentioned how Energy rallied completely against its FX correlation, as a result of that (which is manipulation that is unsustainable), the negative divergence and my thought that Energy was ready to rotate out, Energy saw on of the bigger moves down, but it was working on a positive divergence today.

 The 5 min chart confirms this

 This is one of the few charts covered thus far that has a 15 min chart worse than the day before.

XLF-Financials

 Financials were in line and showed the same afternoon falling out with a very late attempt to recover.

 The 2 min chart is quite strong here, surprisingly strong.

 As is the 5 min chart.

 Even the 15 was more positive today than yesterday.

XLK-Technology

 The 3C trend in XLK is very positive, perhaps Tech will rotate back in and finish this off.

The 15 min trend is perfectly in line, which is an improvement over the negative divergence that I should suspect to see.

Risk Assets...

 Commodities vs. SPX which held up better on Monday and much better than they should have on Today considering the $USD's position, saw a lot of downside today to bring them reasonably close to the short term FX arbitrage mean.

 When comparing commodities to the Euro in green, commodities were stronger than the correlation implies later Monday, they continued much stronger on Tuesday and today not only reverted back to the FX implied mean, but overshot it. There are 2 market concepts, "Reversion to the mean" which is what these risk asset charts are all about and "overshooting" or the pendulum effect I have mentioned many times. Once momentum gets some wind behind its back, the market often swings in wild moves overshooting reasonable expectations.

 This range in High Yield Credit is slightly positive for the market, Credit should be diverging badly to the negative when the bounce is complete and although longer term trends are horribly divergent, these shorter term trends should lad the market.

 Yields were relatively positive on the open and more or less supportive of the market here as they too will diverge on the short term charts badly before the big reversal, at least that has been our experience to this point.

 Here's an example of the same chart, but looking at the longer term trend, it is very negatively divergence, but the intraday charts need to do the same, if the SPX were to move higher as I drew in with a green arrow and the short term diverged on that move, the resulting negative divergence on this chart would be far worse than any other failed bounces we have seen this year.

 The $AUD is a god leading indicator for the most part, I have to say this divergence between the $AUD and SPX is very ugly for the market, even as $AUD tried to move with the market intraday.

 The Euro vs the SPX, in a normal risk on move, the Euro rallies with the market. To the left, the Euro was more supportive of the market and the rally in the SPX continued, at the Tuesday rally, the Euro was very divergent and you see what happened on that parabolic curve back down. Today the divergence is pretty bearish although the Euro did move with the market most of the day, only  in the afternoon did the Euro start to drop, this may be what caused 3C to drop in the afternoon on the market charts. Equity trades keep a close eye on the currency markets.

 This is another one of the more bullish charts, High Yield Corp. Credit which almost always leads the market as a leading indicator, was supportive of higher prices Monday, was slightly negative at higher prices on Tuesday and today is again supportive of higher prices.

 As for the 3 major industry groups and their momentum relative to the SPX, Energy had been leading the market Monday/Tuesday and was severely lagging the market today. I mentioned in last night's report that I thought Energy would rotate out.

 Financials have been in near perfect momentum correlation with the SPX, there was a slight dip at the end of day today.

Here's where it gets interesting, Technology is supportive of higher prices Monday, we get higher prices Tuesday, Tech fails to maintain momentum and is hinting at lower prices during Tuesday's bounce and today Tech is showing better relative momentum than the SPX.

Finally, this to me is the most telling risk asset as to near term market direction, AAPL.

 AAPL right at support, after Mon/Tues Tweezer bottom.

 Interestingly, AAPL puts in a bearish descending triangle right at support after a trend down, traders take this to be a continuation of the downtrend. Look at the triangle's support, it's the same as major AAPL support.

 About that triangle, while Technical Analysis tells us its bearish and a continuation pattern and to expect the next leg lower, 3C is in a huge positive divergence today.

Even on the 15 min chart, AAPL put in a stunningly strong leading positive divergence. Shorts may have already entered AAPL on the bearish price pattern alone. One thing to watch for is a short term break below the triangle's support and see if volume is huge on stops and shorts coming in to play, that would give AAPL extra upside momentum to breakout of the triangle to the upside.

This is probably the only chart I really needed to show you tonight, but I wanted you to see how the market closed as I wasn't here.

So I'm ready for a break in the market, but I'm still leaning toward one final blow off top with AAPL leading the way.

I have an 8:30 appointment with my wife to see a specialist and hopefully get this taken care of, I hope to be back before the open, but if I'm not, I will be shortly thereafter.

If I have time, I'll be sticking up a few more posts tonight.

Final Update-Emergency

My wife just returned from the Doctors and she needs to be hospitalized immediately so I'm going to have to cut today's live market updates short.

I'm going to give a final update for right now, Basically what I said i the last update still stands, at this point until there's a pullback we won't have much in the way of new information.

I will update as soon as I can.