Quick Market Update

Today feels an awful lot like trying to hold asset prices as high as possible as the last day of Q1 and thus window dressing or the "Art of Looking Smart" in which fund managers sell their worst performing assets and buy the best performing assets for the quarter so when the new prospectus goes out or their holdings as of the end of quarter as filed with the S_E_C_ are looked at by less than sophisticated investors, it "seems" they were in all the right places and out of all of the wrong assets even if that's only true for the last week of the quarter, without digging further, most people will hardly know the difference at first, although the game can't last forever as performance is ultimately revealed and no matter what your S_E_C_ quarterly filing says, if you're not actually performing as a fund manager, all of the Window Dressing in the world isn't going to change that.

There are additional considerations such as the management fees being charged on a quarterly basis and as such, keeping the market or your portfolio as high as possible in to the quarter can make a big difference if only a fraction of a percentage depending on the size of your assets under management (AUM).

Yesterday revealed some very ugly looking charts in to higher prices which is what we expected to see on a bounce and a  simple corrective/counter trend bounce at that rather than some of the more strategic and tactical head fake moves we have seen to get retail to chase prices above a certain well known resistance level like the early 2015 range that was so obvious.

I'll have more in detail as I post futures and leading indicators, but for now, the Dow 18k would be an important level to reach before the end of the quarter to keep investors in funds feeling good about the market. whether that can be accomplished and held is another matter.What is ideal and what is reality are two very different things in a market with so many competing agendas.

As I said above, today feels more like they are trying to hold the market from slipping lower as yesterday did see some real damage.

Whether we can get some higher prices in to the end of the holiday shortened week or not remains to be seen.

I wouldn't say the market is running on an empty gas tank, but it was burning fuel at an incredible rate yesterday off the bounce/base lows which I originally suspected to be two bases that were part of a larger "W" base, the first was noted on March 11th and the second at the recent lows. After more looking, I feel that these were most probably two individual events and I'll show you that in the Index Futures update coming out.

Right now things are slipping fast,  and this is the reason I have maintained since the start, I would NOT try to trade this long, but stick with core shorts and if possible add to them, that in my view is a win/win scenario. Introducing risk by trying to play a bounce long when we are in stage 4 decline, is going against all probabilities.

 Daily SPY unable to make a higher high intraday and showing a taller upper wick on the daily candle meaning higher prices intraday have been rejected on what we already knew from yesterday was distribution in to yesterday's prices/bounce.

Intraday stops are being hit at an important short term stop level, note the volume.

This "could" lead to a bounce as shares are picked up en masse and on the cheap, but a day late and dollar short as the quarter ends today at 4 p.m.

Here's a better look at the importance of this level and why stop are being crushed...

 Near term support is right at the level being breached, it was yesterday's open, today's open and as such a short term support zone in which stops were placed just below, they are being hit right now.

I'll be looking to see if there's any accumulation of the stops being run, but from what we witnessed yesterday, there was heavy distribution in to 1-day higher prices, I doubt anything, even if we can find it, will last much beyond a tactical short set-up and this is a PERFECT example as to why I said I would not play this long, but leave my core shorts in place and if given the opportunity, add to them in to higher prices that give you a better entry with less risk.

Quick DIA Update

Despite all of the market breakages this morning, I don't think they are as much conspiracy theory as some would have us believe. The signals from yesterday showing negative divergences in to yesterday's bounce gains is what we have expected since first identifying even the possibility of a bounce so yesterday and its signals really are not surprising, although the change in character for bounce behavior, while not surprising, is noteworthy.

The DIA has had the best looking underlying charts and thus far the best relative performance so it also is not a surprising that of all of the averages RIGHT NOW, the DIA looks closest to an intraday bounce.

I'll update the broader market just after this as it requires a lot more charts being captured, but those charts do NOT look like these DIA charts which are only dealing with the intraday DIA.

 This 10 min chart represents the most recent base for a bounce starting around the 25th,  as you can see as per the 3C "First Divergence/Target" concept, the DIA has already surpassed that area where the first positive divegrence was noticed so if you had gone long DIA right where the first divegrence was noted, even though the process of finishing the base wasn't done, a majority of the times price , upon reversal , will surpass that initial divegrence area and the trade would be in the green.

While I'm not recommending this as a trading strategy, it is helpful in trying to determine minimum targets for a divergence.

The real divegrence or the strongest part was last Friday as our week ahead forecasted we'd see the bounce likely Monday after an initial quick pullback to the lower end of the base area which didn't happen as futures ran higher on surprise PBoC news over the weekend and then overnight Sunday/Monday a.m. before the market open.

Also note the damage done yesterday alone on this 10 min chart, quite a bit as 3C is leading negative and below the bounce/base positive divegrence, giving us more evidence of what we expected to be to the highest probability-  selling in to the bounce.


Now for an intraday perspective as that's really what this is about...

The 1 min 2-day trend shows the damage from yesterday, but looking a the intraday chart on an intraday basis today reveals something you can already see at the white arrow.

The same 1 min chart zoomed in to intraday/today with a recent positive divegrence on the afternoon dip.

 The 2 min chart zoomed out shows similar damage as the first 1 min chart above, but zoomed in to intraday trade shows the same positive divegrence at the same place, the DIA wants to move higher here. Remember Dow 18k is in the area and it's a strong psychological magnet.

 The 3 min chart intraday shows the exact same thing as the other two, thus my alert for a DIA bounce, although for me it's largely informative than actionable, but everyone has different trading styles and risk tolerance.

And finally coming back full circle as we started with the 10 min chart above, the 5 min DIA also shows a positive divergence, not as developed as the faster timeframes, which is to be expected as this is a stronger timeframe, but it is there and that tells me the probability of a bounce is decent.

On an brief side note, if you look at the 2008 market decline, you'll notice not only did large caps hold out longer, but they held together better, despite the fact they still declined, they had much better relative performance as long only funds are going to flock to the "Cleanest Dirty Shirt"/

Quick DIA Update

Despite the damage done across the averages yesterday, I'd think we still have some gas in the tank.

The DIA intraday looks the most interesting and looks ready for an intraday move higher. Again, this is not something I want to trade from the long side, but rather let the trade come to us and short in to price strength (or sell).

Just an FYI and DIA charts will follow as well as a broader market update.

USO Update

I'm only going to be covering the near term update with USO right now as the longer term has been covered numerous times and you can find a recap at the last USO Update of March 25th, Crude/USO Update.

From the same update, Crude/USO Update I posted the charts and analysis below (Italics)...

 "On a 5 min chart that divergence sending USO lower is obvious at the far left as is the area in which stops were run and confirmation at the green arrow.

I believe the base was strengthened in the area, but I also believe that it's not quite done and despite the recent higher prices, oil should be in need of a pullback to broaden the second bottom a bit more."

The area I was talking about "broadening" is where the white positive divegrence (box) is, thus I suspected the move to the upside which at that point was confirmed, would be seeing a pullback soon. In fact, it was only 1 more day of a move higher on a gap up which should be ringing some alarm bells when looking for a pullback, that we started to see the pullback mentioned last week.

This short term 3 min chart gave evidence to the probable pullback starting to show signs of becoming a reality, also from the same post linked above from last week, the 3 min chart as of last Wednesday...

3 min chart's negative divegrence starting, along the lines of a pullback as it's not a very strong timeframe.

Since this post...

The daily chart showing the white area of the base and the move higher, last week's post of the 25th linked above with the initial 3 min chart negative divergence starting to build a probable pullback. The next day we gap up on volume and a loss of momentum with an indecision Star candle before starting to pullback and note the lower volume on the pullback, suggesting it is indeed a pullback rather than something stronger (meaning a stronger downside move).

Today's small bodied Doji star (thus far) with yesterday's hammer looks a lot like this pullback may be nearing its end, although it didn't move as low as I had suspected it might on the 25th.

Remember we have Inventories after the close and tomorrow. Today is also the last day of high level diplomatic talks regarding Iranian sanctions which may be lifted allowing Iranian oil to increase supply in the market, still there seems to be something longer term that the market is aware of in which oil prices could recover which is what we have been following for some time.

While that's an EXTREMELY simplistic view of negotiations (I encourage you to read several sources on negotiations to get a broader perspective as there's a litany of issues and competing rivalries by proxy like Russia and China that have a great deal of influence, it's well beyond the scope of this post to describe the many issues at hand and what different key players hope to achieve, it's simply not a simple issue and for that reason, we can't predict the outcome any more than the actual negotiators right now so we go with what we have, the charts, where money is moving to.

As a reminder, there seems to be a large base developing in oil on 2 hour charts and some longer, this is a 30 min chart that looks more directly at what appears to be a larger double bottom base as we had forecast in advance of it actually happening.

 The 30 min base area and also on a longer 2 hour chart.

 This 5 min chart should look familiar, the base area, the forecasted pullback last week
(red box) and it has the look of a small positive divegrence starting to take shape.

 The 3 min chart shows a closer section of the same, the confirmed move higher at the green arrow just after the small accumulation area (above in white) and the negative divergence the day after our call for a probable pullback as well as the pullback with early confirmation and again, perhaps a positive divegrence starting to grow in the area.

The Brent Crude Futures look even better, but keep in mind that Brent Crude and USO which is WTI crude, do diverge and while they generally move together, they have differences in relative performance. BNO is the ETF that represents Brent Crude.

USO (green) vs. BNO (red).

Interestingly the Brent Futures look more enthusiastic at this area in which the pullback from last week looks to be losing steam...

 While I find the charts/divergences on Futures tend to be a little less strong than signals in the cash market 3C charts, they are close enough to take in to serious consideration (there are also some slight differences between timeframes, for instance a 5 min chart of USO carries a stronger signal than a 5 min chart of Futures, but not so much that we should ignore the following).

Note Brent Futures 5 min in the same flat area we just looked at in USO as a possible reversal area show a much stronger looking divegrence suggesting that a bounce from here is becoming much more likely.

 The 10 min CL (Brent Futures) with the negative divergence of the pullback we were calling for last week and what is shaping up to be a more impressive positive divergence as the downside daily candlesticks run out of downside momentum.

 The 15 min Brent Futures chart showing the same, this is probably more along the lines of a strong 5 min USO divergence which is not there to the degree it is in Crude futures (Brent). However, even the daily candlestick thus far today, suggests that this is a probable accurate chart.

And on a 60 min chart the second bottom of the base area, the run up as we expected, the pullback as we expected and the chart is pretty much in line.

What this tells me is the probabilities favor this having been a simple pullback in the newly started move to the upside off the white accumulation area and there are no real divergences suggesting anything much deeper in terms of a pullback.

I believe USO is nearing or ready to make its next leg higher in this new move up which is off the second low of the broader "W" base or double bottom.

The updated Trend Channel Stop which ends the down trend from summer 2014 is around the $18.90 area on the Trend Channel 3-day Channel/stop.

I'll keep an eye on USO, for now we had opened a half size position (long) in USO, I plan on leaving that open, I'm not quite ready to add the second half, I'd like to see the Trend Channel stop out first, there's still plenty of upside.

*Just be aware of the negotiations and try to get a feel for what's going on, it's far from simple. Other than that, I believe oil may have taken such a dive as it did from last summer in anticipation of Iranian sanctions being lifted and their oil hitting the market, in other words, the market would have been discounting 6-12 months in advance which is what the market normally would do and did do until we had unprecedented Central Bank intervention from 2008 forward, much of it being unwound now at least in the US.

Early Update

This morning's intraday chart mix between the Index futures is not all that surprising given the mix in the Dominant Price/Volume Relationship last night with two different dominant relationships and one that wasn't even close to a dominant relationship, but rather almost split equally between the four possibilities, which was the Russell 2000 as has been the norm in that Index for the past month or so which is strange.

On the open we saw a short term capitulation selling event with the NYSE TICK hitting -1500 and volume swelling as well, typically a good indication of an intraday low for the moment any way.

 TICK opening at -1500

SPY 15 min intraday volume spike on the open, indicative of a short term selling event or exhaustion event, not surprising given the overnight action.

Interestingly yesterday not only the internals, but Leading Indicators and 3C charts all pointed to unusual weakness so early in a bounce, but as I have repeated several times, this is not the same market as a year ago or even a month ago. The bounce expected is not one of the typical ones in which we can see what it's job and target are such as the February cycle to take out a very clear range/resistance area in the market from early 2015, but rather a more "normal" counter trend, corrective bounce to alleviate a deeply oversold condition that was developing in breath although using the conventional definition and conventional indicators that define oversold, you probably wouldn't have seen the same thing.

Although ES's 1 min chart looks pretty decent for something like a gap fill...

the other index futures don't look as good as you saw earlier this morning.

Furthermore, the weakness seen yesterday and wrapped in the Daily Wrap extends well beyond a simple 1 min chart, although it is not all that common for a 1 min chart's weakness to hold through the entire overnight session, I think maybe the point is the weakness was beyond just a 1 min chart which you might think of as a short term tactical timeframe and any thing longer being a strategic timeframe, obviously the longer the timeframe the more important the big picture implications are.

Ironically as the EUR/USD and USD/JPY have had a LOT to do with price movement, last night I had put in a section just before the gold analysis in the Daily Wrap that covered the 3 short term to intermediate term timeframes in FX including EUR/USD and USD/JPY. This also included a longer primary trend view, but I found it had about 20 charts and 4 different trends that were opposing for the $USD vs the Euro or Yen and really after reading it, almost had me confused, so I took the section out as it was more than half of last night's post and to me I didn't think many people would even get through it much less have a clear understanding of it, but the bottom line was I expected some very short term strength in FX that would help the Index futures followed by a larger turn down which would be comparable to the end of the bounce and a move to lower lows for this leg of the cycle, followed by a carry trade unwind in which correlations between $USD based pairs and the market would start to break down as the bigger theme would be a carry trade unwind which is not good for the market at all as the carry leverage that is being unwound means all of the equity positions bought using the leverage of a carry trade would have to be unwound as well. 

You see, even a brief synopsis of the charts is a bit confusing, had you seen how long this piece was, I think it was better that I took it out, but the point is that it was spot on with the daily and overnight action as forecast and the longer term forecasts beyond that should hold as well. 

Again, slight strength or support for the market if the $USD breaks lower as shown in the A.M. Update today, but I expect a primary trend bounce in the $USD after it made its first primary trend pullback after quite a bit of strength for quite a long time. After that, I expect another move lower as this is what the F_E_D will push for and the $USD has already shown signs of breaking that former primary uptrend, it's at that point that I think the unwind of the carry trade really accelerates.

As seen above, the 1 min ES chart looks better than the others. but they are at least in line for the most part, maybe a touch better intraday, it's the damage that occurred yesterday and migrated to longer term timeframes that grabbed my attention,

 ES 5 min chart already leading negative and almost all of the damage done this week, which we are only in to the second day.

The same is seen on the ES 7 min chart, the damage is from this week, not last.

And as far out at some 10 and even 15 min charts like this TF 10 min chart above, again the damage was done yesterday/overnight.

There's still what I would call, "Some gas in the tank", it's just a change of market character that needs to be adjusted to as changes in character lead to changes in trends and you may find things that worked well for you over the last several years or even months may now be much different as things change, I suspect volatility ids larger, the market has a more defined trend of fear which can see some fast and large drops that flame out and bounce often, thus I like to stay with a trend trade without too much leverage so I can ride out the bumpy road, but still stay in the road of the trend. Remember in a typical bear market trend, which I'm not saying we are in yet, but I do believe we are clearly moving toward it, you'll have about just as many up days as down days, the down days will just have a lot more volatility to the downside, thus it's not the same as the market you may have grown use to in which the market moves in one direction with few corrections until it turns, this would be a lot more corrections, but a deeper, longer trend if you can ride out those corrections, which for the most part is pretty easy if you understand what they are.

Nows not a bad time to look at primary downtrends and see what they look like.

A.M. UPDATE

From last night's Daily Wrap...

"Finally Futures...

USD/JPY looks like it's going to see some overnight downside, this should weigh on the averages if it carries through until tomorrow and being the divergences on the single currency futures are pointing that way both on the 1 min, 5 min and 7 min charts, I suspect that's a fair possibility (see the ES correlation with USD/JPY the last several days - above).

Index futures don't look good either. They saw distribution intraday and that has put them in a worse position as the day has gone on as we have seen in the averages as well.

The bottom line is this looks like the kind of bounce I suspected and it sees to be falling apart rather quickly, perhaps because it didn't have that base, but again, this was expected to be more of a counter trend bounce, a normal corrective bounce rather than the other types we have seen earlier in the year which had specific targets and goals like to break the 2015 range and create a bull trap."

Sure enough, the overnight session was ugly starting with USD/JPY....

 USD/JPY overnight also taking Asian markets lower including obviously the Nikkei.

The USD/JPY correlation was weaker earlier in the night, but for most of the night, ES (purple) followed the pair lower or vice versa as we saw weakness in Index futures last night.

Crude slid lower. As a reminder today is the last day of high level talks with Iran over sanctions that could see them lifted and Iranian oil back on the market in supply.

I looked at ES and thought , "It looks like we'll bounce", but not all futures look the same on the intraday 1 min chart.

NQ 1 min is kind of in the middle and weaker looking than ES...

And TF is right in line with price.

All of them are negative at the next highest chart at 5 min and longer as we saw last night.

ES 5 min and this is what the other Index futures look like so this last day of Window Dressing may not go down well and the weakness seen yesterday really was weakness, more than I've seen on the first day of a bounce in a long time, but remember the base never gained solid footing either.

The $USD seems to be a big driver of futures and oil, etc right now. Intraday it looks as if it could come down which should help risk assets move off lows of this morning, but we'll have to see what they move in to, I suspect more distribution.

Daily Wrap

Our bounce is here and as I said and displayed earlier today, it's looking a bit weaker than what we may have been use to in the past as a corrective type bounce rather than a head fake with a mission! This is the same bounce we have been looking at with a couple of divergences run over on the conflict in Yemen and this morning in which I suspected a minor pullback, however the Chinese central bank news and RUMORS sent Index futures higher, not that it changes the expectation that we'd be in a bounce today or just after a minor pullback from the divergences at Friday's close.

Again, this isn't anything I would be trying to trade on thelong side, but rather shorting in to any upside once we have strong probabilities and set ups, why introduce risk on less than ideal probabilities when we have positions that are aligned with high probabilities already in place?

I think the market is telling us a few things, one does anyone remember so much market volatility during the MENA Arab Spring or even events like Ukraine / Crimea? I sure don't, I remember thinking, "That's odd that the market or oil has barely moved on a regional uprising that kicked 40 year leaders out of power. However now, much smaller events, rumors and the like are having a far more profound effect on what I would call a "Nervous market".

There also seems to be a rotation from EUR/USD (formerly USD/JPY) back to USD/JPY, but I'm keeping an eye on both at present and the bigger issue seems to be the $USD which I'll get in to in some detail as we move forward, mostly on account of the Carry trade.

 60 min USD/JPY has been out of correlation with ES (purple) until just the past couple of days.

Whereas EUR/USD had been the main pair, again until just the last few days.

A little over a week ago I also mentioned that with our bounce which is likely more just coincidence of timing than anything, we should see an increase in market volatility as most of the time a stage 4 transition (DECLINE) will bounce around with a slight direction, but real direction and real downside moves don't appear and don't hold until the volatility that is not present in that early rambling period picks up which is why I have said more than even a bounce, watch for volatility to increase whether on the upside or downside, but eventually it will matter most to our stage 4 decline.

The weekend news that the PBoC is worried about the amount of fall off in Chinese growth and the hints that they may have to do something about that apparently caused a false or unsubstantiated rumor to be published by Shanghai Securities news, sending Index futures higher overnight with what they called an imminent (possibly today) RRR rate cut by the PBoC, of course that was mere speculation/rumor, but the market bought it and thus ran over the second small divergence (the first on Saudi/Yemen hostilities), but fulfilled the larger divegrence we have been tracking for a bounce which we expected to start today anyway.

There were a couple of short squeezes, right on the open and around 12:30, TICK shows them pretty well.

Between the opening Short Squeeze and the just afternoon squeeze, it was just about the biggest Most Shorted Squeeze in 2 months, although not much happened outside those areas.

Large caps/Dow was the best performer today, but just missed holding on to the psychological magnet of $18k. Talk about volatility, now the Dow and SPX are green for the year, however they and the NASDAQ are red for March. As I said Friday, I don't know how many times I have said the averages are red or green for the year (YTD).

Don't forget about Q1 2015 Window Dressing (The Art of Looking Smart) as the quarter ends tomorrow.

Earlier I posted that the Process of distribution in to the bounce seems to be well under way, which is pretty early compared to previous bounces, there's more on the topic right here, Process Has Begun...

Here are a few charts showing the close...

 SPY 3 min intraday leading negative

QQQ 2 min intraday leading negative.

IWM 5 min has seen migration today alone, in fact even the 10 min chart shows a negative divegrence.

I'd say our expectations of selling in to strength or shorting in to strength are being met, remember though this is a process, so be patient, lets let the trade and the set-up come to us. The point is, it appears we are well on our way to what we expected and should be moving back to the stage 4 decline sooner than later, perhaps even sooner than I expected.




Gold
I was looking at Gold (GLD/GDX/?DUSt ) which was a short idea just March 23rd, at a slight gain right now...TRADE Idea (SWING) Gold Short or GDX Short/ DUST Long


Here's what I suspect we are looking at in Gold on several different trend/timeframes and I'll use GLD and gold futures' charts...

 This red arrow is where the post for a GLD/GDX short or DUSt long idea went out on 3/23, TRADE Idea (SWING) Gold Short or GDX Short/ DUST Long.

 Gold pulled back from our call earlier in the year and we wanted to monitor the pullback as I suspected there would be a nice area to buy GLD on the pullback. We saw the positive divegrence in white after the pullback on this 30 min GLD chart, but since there's a clear negative divegrence. I believe gold's primary trend will be to the upside and likely around the same time the market is breaking to the downside on a primary trend basis, but it was signals like this recently that caused the call for the GLD short SWING TRADE, again the post, TRADE Idea (SWING) Gold Short or GDX Short/ DUST Long.

I believe on a swing trade basis, GLD has more downside to go, in fact it's likely just getting started.

On a 30 min chart of gold futures you can see a confirmed uptrend at the green arrow, this is coming off the accumulation/base you can see on the 30 min GLD chart above this and the negative divergence in red is the same as the 30 min GLD chart above.

 The 15 min chart shows the same thing, a positive divegrence after GLD's pullback, a bounce and a negative divegrence which is what the most current position, TRADE Idea (SWING) Gold Short or GDX Short/ DUST Long is based on.

Again on a daily GLD chart it looks like this...

From left to right... Our call for a pullback and eventual probability of a bounce buy as the pullback ends, the bounce higher and the most current negative divegrence, I suspect this pulls back toward the recent pullback lows in white and this is why this is not a bounce trade, but slightly longer swing trade.

 

30 min gold fuures shows the same negative divegrence that caused me to post the trade idea linked above.

 The 10 min GLD chart from the pullback positive divegrence (which looks a bit too small to me to be the extent of a base for a buy on the scale I was considering when calling for the pullback in January, so a move back down toward those lows and a double bottom of sorts or "W" base seems most likely on the Swing trade basis/target.

 The gold futures 7 min chart also sows the negative divegrence with more detail and how gold futures have pulled back since then.

 GLD 5 min chart shows the same negative divegrence like the gold futures 7 min above, although at today's gap down, the chart is at least in line very short term.

Looking at the 2 min trend of the same area, we can see the same positive divergence from the end of the January pullback and the same negative divegrence above that led to the gold short Swing trade idea.

While I suspect VERY near term we may get something like a gap fill, on a swing trade basis, I'd expect Gold to pullback likely at least to the former base lows around $109.50-110.

This 1 min Gold futures positive divegrence may pull off a gap fill from today's gap down, but on a swing trade basis, it shouldn't make any difference even if it fills the gap, otherwise I think the trade and the downside target are still in line on a swing trade basis. For anything larger than a swing trade, we'll have to see what Gold looks like if/when it reaches the area it last accumulated at. I personally think there's a probable primary gold uptrend trend trade that would be available, but I do think even if the wider base is in order, this most recent pullback base area needs to widen out a bit more to support a move through numerous resistance levels.


Leading Indicators...
Our leading indicators like the SPX:RUT ratio are still supportive of more to the bounce. However a few are starting to lose some of that support early on which is another indication that we may be dealing with a much shorter bounce than anticipated and I didn't anticipate a lot beyond a typical corrective counter trend bounce.

HYG gave up some support in to the close, although still broadly supportive, the decline that may be a divergence soon looks to have started. VXX and TLT didn't show much different from our earlier Leading Indicators post. Both Pro Sentiment indicators fell off hard in to the afternoon, another indication of perhaps a weakening or even weaker than expected move.

Yields barely moved at all, they were in a +1/-1 bps range today. which puts them pretty close to the SPX reverting to the mean short term so they shouldn't have much of a positive effect like they had just before the bounce started today.

Internals...

The Dominant Price/Volume Relationship was mixed somewhat today with 16 Dow stocks closing at the most bullish relationship, Close Up / Volume Up, however, ironically this also is most often a next day short term overbought condition.

The SPX had 281 stocks in its dominant relationship and the NDX had 68, both were the most bearish at Close Up /Volume Down. This isn't a strong next day bias relationship, but it is a strong indication of what kind of bounce this is.

Again, like we have seen so often over the past month or so, the Russell 2000 has a conspicuous lack of Dominant P/V relationship.

Other internal measures also suggest a strong overbought condition is already developing with 9 of 9 S&P sectors green with Energy leading at +2.15% and Consumer Staples lagging at +1.01%.

An amazingly strong 218 of 238 Morningstar groups closed green. The market was obviously near term oversold as reported last week on a 2-day basis looking at internals and is running to the other side of extreme very quickly, while seeing distribution in to the move.


Finally Futures...

USD/JPY looks like it's going to see some overnight downside, this should weigh on the averages if it carries through until tomorrow and being the divergences on the single currency futures are pointing that way both on the 1 min, 5 min and 7 min charts, I suspect that's a fair possibility (see the ES correlation with USD/JPY the last several days - above).

Index futures don't look good either. They saw distribution intraday and that has put them in a worse position as the day has gone on as we have seen in the averages as well.

 ES 1 min

TF 1 min

ES 5 min

NQ 5 min

TF 5 min

And these keep going through 7 min charts, and even on 10 min charts .

The bottom line is this looks like the kind of bounce I suspected and it sees to be falling apart rather quickly, perhaps because it didn't have that base, but again, this was expected to be more of a counter trend bounce, a normal corrective bounce rather than the other types we have seen earlier in the year which had specific targets and goals like to break the 2015 range and create a bull trap.

Have a great night, I'll likely be throwing some ideas out there sooner than later, sooner than maybe I even expected.