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Saturday, April 25, 2015

IMPORTANT MARKET UPDATE...PART 1: The Forecast

This is a sample
market analysis/forecast post, the first of a series.

I believe the market is nearing an important area, so we are looking back to our April 2nd Market Forecast to lay the ground work for current analysis as everything we were looking for to happen, has.

Saturday April 25, 2015

Going back to our April 2nd Market forecast,IMPORTANT: AAPL Set-up & Market Movement, in which AAPL was partially used as an example to serve as a proxy for the broad market, I have included some of the most important excerpts from the post. Remember, this was all well before any moves to the upside and we had made some very specific forecasts as to what we'd be looking for.

This is what the SPX looked like on April 2nd, 2015, the day of the forecast linked above.
Looking at the Daily SPX chart from April 2nd, not much is apparent other than a broadly lateral range through most of 2015. I think most would be hard pressed to make some of the forecasts we made bellow on April 2nd based on the chart above.

Some of the expectations and forecasts from the April 2nd post (below) include:

-Market not done in the area which is why there weren't any recent short trade ideas.
-Triangles to form in the major averages as well as a number of individual equities.
-Market & equities to breakout above the apex (point) of triangles.
-Triangles will create head fake moves as a prerequisite for a larger turn to the downside (bull trap).
-Smart Money Would be distributing in to higher prices.
-Past chart reliability gave me little reason to doubt this forecast.
-Probabilities showed that a breakout would be revealed as a failed or false breakout and fail as a head fake move.
-A Head Fake would lead to strong reversal and was a prerequisite to a strong downside reversal.
-Non-Farm Payrolls on Friday April 3rd (the next day as the market was closed for Good Friday) would likely be the catalyst with a print in the mid 150k. Consensus for Non-Farm Payrolls was for a print of +247k, the actual print was way lower at +126k, well below consensus and even the whisper number  of +150k, leading to the start of the forecasted move.

Some of this may seem random at first, obviously on April 2nd when the forecast was made, it was based on probabilities without the benefit of 20/20 hindsight. Still, I'll do my best to put a bow on it at the end of this series. Yesterday's Daily Wrap showed much of what we forecast and expected, however I think I missed an opportunity which I will correct to use the signals in to the April 2nd forecast as an example, rather than the current signals now since we now have the benefit of hindsight to see the signals work as they did previous to this forecast playing out. If you look at the charts included in last night's Daily Wrap post, look at the Leading Indications and 3C signals going in to early April and our April 2nd forecast and you'll see what I mean.

I believe this is the closest thing to actual "Beauty" in the market, it's a moment when everything lines up as it should ("seemingly" totally unrelated assets and indicators) and gives us not only a strong market forecast, but multiple trade opportunities...

I'll be adding additional posts this weekend to pull all of this together in to a tight, neat package.

Now...

Going back to the April 2nd market forecast that got us to where we are now, IMPORTANT: AAPL Set-up & Market Movement...

"I have heard from a lot of members who are short term traders, quick option trades in and out and they have been pulling back and sitting on the sidelines as this bit of a range has been developing.

I first saw what I thought might be a triangle-like range in the broader market, but didn't mention it because I didn't have any decent objective evidence to support that conclusion at the time, but in looking at AAPL, it brought me right back to what I saw in the market over a week ago.

Here's an example...

 Perhaps one of the reasons I didn't mention it is because it's not a well formed triangle as you can see above, but just watching the gist of price action, you can see there's a triangle like structure and I suspect as the range has narrowed in to the apex at the right, this is one of the reasons short term traders have been having more difficulty with positions, the chop is just picking up in frequency.

What is a triangle when it comes to volatility? It's like a Bollinger Band squeeze/pinch in which the ATR (Average True Range) might be getting more volatile on an individual day, but the range in the market is squeezing like a Bollinger band pinch, which is THE PROMISE OF A HIGHLY DIRECTIONAL (MOVE) INCREASE IN VOLATILITY. 

THIS MAY BE EXACTLY THE REASON MY ANALYSIS AS OF YESTERDAY AND LAST NIGHT'S DAILY WRAP FORESAW A WEAK MOVE IN THE MARKET NEAR TERM UNTIL LEADING INDICATORS PICKED UP WITH STRONGER SIGNALS AS THE RANGE TIGHTENS MORE.


This is the SPY's triangle, slightly different in that it's a Right Angle triangle rather than a symmetrical, but neither triangle looks like a true consolidation/continuation pattern, just look at volume which should show a clear trend of decreasing as the triangle matures.

In other words, it looks like a set up for some kind of head fake or Crazy Ivan move....we can guess based on how Technical traders will react and how Wall St. uses that against them to get an idea of what might happen short term and what would be the resolution from there.

Remember as of yesterday we had charts in the 7-15 min range in Index Futures that were more on the positive side than the negative. This was part of our analysis for the near term trend of the market and why we haven't made any strong moves to short in to price strength as the charts just haven't been supportive of that yet, as if the market isn't done in this area.

Perhaps those intermediate timeframe charts are the answer to the Triangle question and what we'd normally assume to be a head fake move to the upside,  which would also be the set up needed to enter shorts that are setting up like GPRO and Biotechs both of which were featured last night in the Daily Wrap.


 The intermediate 7 min ES/SPX futures chart shows the negative divergence from last week that sent prices lower this week as per our "Week Ahead" forecast from last Friday.

Note the slightly positive divegrence in white to the right. 


While the 10 min charts are biased to the positive as well, this 15 min chart of NASDAQ 100 futures (a stronger timeframe and signal than the 7 min charts) shows exactly what happened from last week's negative divegrence coming in to this Monday and sending prices lower this week. 

To the far right we have the same positive divergence seen on the 7 min and 10 min charts of Index futures.

The 3C charts have been very clear as to what's going to happen with significant moves like this week's... I have no reason to doubt the positive on this 15 min chart.

This would suggest some kind of head fake move to the upside of the apex (point) of the triangle which is what we'd normally suspect anyway just on a conceptual basis and our observations of the market.

But how do we know an upside move would be a head fake (A failed or false breakout)?
We simply look at the charts with the strongest signals and highest probabilities... The 30 and 60 min charts are close to inline which means they don't have this positive divegrence that the 7-15 min charts have, this also means that if the divegrence (positive) from the 7-15 min charts is not on the 30 and 60 min charts, it's not that strong, thus the upside move can either be expected to not be that strong or more probable to fail just based on the 30-60 min charts, but these are not the charts with the strongest signals or highest probabilities, these are:

 ES 4 hour with a very strong and obvious 3C leading negative divegrence right in the area of the triangle price pattern.

And the strongest underlying 3C trend, the ES/SPX futures daily chart with an incredibly strong leading negative divergences telling us smart money has not only been selling, but selling at a pace we haven't seen on a long time if ever, despite the negative divergences we have seen up until this point.

To recap:  We have a triangle like price patterns and with it the promise of increasing volatility. Low day to day volatility has made short term traders' lives very difficult to the point many are just stepping aside for the moment. With that triangle we have the 1 thing we were looking for to start increasing as a prerequisite to a strong move down, that is higher volatility and we have seen that on daily charts as I pointed out yesterday, just on an intraday basis rather than a day to day trend basis. The things we have been looking for and the things the market needs to make a strong break of the 100-day moving averages that have been acting as support are set up right now with these triangle like prices and the intermediate (slightly strong) charts suggesting a head fake breakout (something else we'd need to have a strong reversal to the downside as it creates a bull trap).

We also already have the highest probability resolution of any move to the upside, above the apex of the triangles in the averages and that's the 4hour/daily charts.

We also have the same on the charts of the averages...

The QQQ 4 hour which is a very strong chart, in fact so strong we usually never had to use these, 60 min charts were strong enough to forecast moves, but as you see there's confirmation of the price trend as 3C moves with price until we get to the October lows which were a break of an important trendline.

...this is the highest probability resolution to any short term move, meaning any upside move that perhaps breaks above the triangle's apex is already showing extremely high probabilities of failing making it a head fake move.


If tomorrow's Non-Farm Payrolls come in significantly below consensus and in the mid 100 thousand (150k) level (*Which it did at a mere 126k*), I think the chance of the F_E_D putting a rumor like QE4 or something else extremely dovish and extremely ridiculous, could be pretty high, it also gives us the move that we need to sell short in to strength and the volatility we need for the move down to break the 100-day moving averages and challenge the October lows.

Now, lets see if we have the signals in AAPL to make this theory a probability...
Looking at the trend for the short term 3 min chart, the timeframe that steers short term price movement, note the negative and positive divergences, at first you may not notice anything, but if I take away 3C and just show you the exact same chart with price only you'll realize something...

And that realization is...That triangle in AAPL is no coincidence or random price pattern, it was created, just look at the divergences above sending it lower and higher to create this triangle.

Monday, April 20, 2015

Stock Market Forecast Using Volume, Breadth & 3C


These two forecasts are from our members' site, 


taken from the weekly post and forecast, "The Week Ahead" and "The Daily Wrap" from Friday, April 17th, 2015
&

"The Week Ahead" Friday, April 17th, 2015

"Today's events have broken the charts, but I suspect Wall St. will not accept the losses represented by today's gap and there's still some question as to whether or not we see a head fake/false or failed breakout as the SPX daily chart has the MOST obvious resistance line in the most watched index with a concept that occurs (normally) about 80% of the time before a trend reversal... I believe a gap fill is the most probable outcome.

 I would encourage you to start worrying less about the very near term intraday or day to day trade, and start focussing on the longer term trend positioning as represented in today's earlier post, Important Trend Market Update

LEADING INDICATIONS

 This is the second Pro Sentiment (leading) Indicator used for stronger confirmation. Intraday today it has been leading the SPX, pointing to a gap fill or perhaps even a head fake move

SPY

 SPY 3 min with a relative positive divegrence suggesting some attempt in to early next week to fill the gap from today, possibly more if there's a stronger base built, but the market is in a very dangerous spot right now based on the trend and signals.

QQQ

QQQ 3 min calls the negative divergences at the top areas well, in fact despite the unexpected events this morning/overnight, the chart looks as if it called the move perfect and has a very small, short term positive divegrence at the intraday flameout lows (capable of supporting a Monday Gap fill).

 IWM
 The EXACT same can be said for the leading negative IWM 2 min, as I have been saying, anything beyond 1 min has been very ugly and as of 2-days ago, started forecasting the market well on an intraday basis as well despite being deeply dislocated. The leading negative divegrence of the last 2 previous days (Wed./Thurs.) which were also Bearish Candlestick Reversals, called today's move perfectly.

Again, there's a small intraday positive divegrence at the flameout lows of the day this afternoon (suggesting an early bounce next week).


DIA
 DIA 2 min is both leading negative and then positive at this afternoon's flameout lows which were also an intraday head fake/stop run below intraday support levels. Again, like most everything else, it points to some early strength next week.

EARLY MONDAY...

IWM

Intraday IWM 1 min showing a leading positive divegrence in to the close and at the Flame-out lows of the day. This argues for the market to pick up where it left off on Monday with price strength based on this leading positive intraday 1 min divergence, however the larger trend doesn't tell us anything even close. In fact, quite the opposite.

And from our,  Daily Wrap  Posted Friday, April 17th, 2015

Interestingly for next week, (especially the early part) Today's Dominant P/V (Price/Volume) Relationship (among the component stocks of the major averages) was SUPER Dominant across the board: 27 Dow stocks, 91 (of the) NASDAQ 100, 1141 (of the) Russell 2000 and 327 (of the) SPX 500, ALL: CLOSE DOWN/VOLUME UP.

This is obviously a very bearish relationship, but it's also a strong 1-day oversold relationship and most commonly we see a short term oversold bounce the next day or so.

Of the 9 S&P sectors, ALL NINE WERE RED. Utilities were the best performer at -0.36% and Consumer Discretionary lagged at -1.48%.Of the 238 Morningstar groups, 226 were red. (This too is a strong 1-day oversold condition based on breadth)

Only 11 Dow stocks remain above their 50-day moving average, only 1010 (just about half) of the Russell 2000 are above their 50-day.
Overall, the market is at a deep 1-day oversold point so our forward looking analysis for early next week doesn't look so far off, a 1-day oversold bounce and INCREASED VOLATILITY sounds very reasonable here, that should be an excellent entry for positions, options/puts, etc.

Tuesday, April 14, 2015

USO / Oil Trade Set-Up


At Wolf on Wall Street we set-up trade probabilities in advance. We let the trade come to our members rather than chasing price around with no idea why and/or no edge or one we don't understand. Our edge is of our own making, not something that we don't understand and certainly not in a position that we don't expect in advance; it's not based on anyone else's opinions or analysis, but rather our own proprietary indicators. 

Rather than chase the market like sheep being led to the slaughter, Wolf on Wall Street members learn how to stalk the trade, let it come to us on our own terms at the place and time of our choosing and even simply walking away if the probabilities that are known in advance aren't confirmed by our own proprietary custom indicators. After all, to beat the market you have to see what the crowd missed and the crowd has never seen what we see every day, our advantage, our edge. As it has been said, "If you don't know what your edge is, you don't have one".

Below are some recent posts in which we set up our trades and market expectations in advance and let them come to us, confirm the probabilities we expect to see in advance before ever entering the trade and only entering the trade when we have a strong edge over the crowd.


After taking double digit gains today of nearly +30% for just over a day's worth of market exposure in GLD Puts, entered Friday around 2:30 p.m.

And then closing the swing position's OPTIONS part today around 10:45 a.m. on a probable near term GLD bounce,

we were able to preserve a nearly +30% gain for little over a day's worth of market exposure...


And come back to the position to fight another day, once again on our terms at the time of our choosing after we have confirmed the expectations we set in advance.

Today we entered a USO short/Put position we have had set up as a potential short trade since last week...


USO advance trade set-up from Thursday April 9th, approx. 4-days in advance notice and estimated target as we let the trade come to us.

Below is the actual USO Trade confirmation from today's post showing the signals in our proprietary money-flow indicator, 3C which was confirming the signals and the price target area we had set last week. In after hours, our trade is already at a significant profit


From our members' site,


USO Trade Follow Up...
Tuesday, April 14th, 2015

Here are the charts for the last USO / Trade update. I'm not including the /CL (Brent Crude futures), but there were signals there too.

Remember the original post was last week, Tuesday April 7th, USO Update as we saw a change in character from in line which USO had been since the previous update on MArch 31st, to showing a negative divegrence forming. That post was followed by USO Trade-Set-Up on Thursday April 9th and the open long position, Closing USO 1/2 Size Long Position was closed to retain small gains and prevent any downside risk, however USO was not quite where we wanted to see it at that point which was in the area of the 4/7-4/8 gap fill which USO hit today.

Here are the charts that led to the TRADE IDEA: USO SHORT (PUTS) just posted.

 The USO gap fill was not the specific target, although it was given as an area to set price alerts and an area expected to be filled and likely target. The actual signal for a USO short trade (although like GLD, the longer term perspective is that of a primary trend reversal to the upside as a large 2015 base seems to have good 3C accumulation/support for a trend reversal soon. In the meantime, I have expected a USO pullback, likely to the $16-00 area to broaden out and finish the base that has been under construction there since 2015 started. There are a lot of recent USO posts covering multiple timeframe analysis and the longer term perspective (long) with an upside reversal on either an intermediate or primary (Dow theory trend classification) upside reversal much like Gold.

Today's filling of the gap between the two red trendolines (yellow box) actually had NOTHING to do with the actual USO trade signal, it was coincidence and experience that our predicted area for a USO trade met with the right signals, it was not a price-based/target-based trade idea, it was a 3C chart based trade idea with the gap-fill as a probable area in which we might expect USO to move to before it was ready for a downside swing trade.

This is the USO 60 min chart. I had not updates USO until Tuesday April 7th since MArch 31st and the reason was that the 3C charts were perfectly in line with the price trend just as the market was last week with Index futures, thus we had no edge until the first divergence showed up last week when the April 7yh update was posted followed by a "Trade-Set-up" AS WE LET THE TRADE COME TO US ON OUR TERMS, AT OUR PRICE WITH CONFIRMATION OF OUR EXPECTATIONS.

Rather than chasing price like a flock of sheep, we set upo the USO trade expectations and let the trade come to us. As with any ambush HUNTER, PATIENCE is a prerequisite and one that we are often well compensated for. 

As the 60 min chart shows, despite the longer term positives and base, it looks very much like USO/Crude oil, still was going to pullback just as we have very similar expectations for gold.

The 30 min chart which has more detail than the 60 min chart above this one, shows the "In line" or confirmation status at the green arrow. 

This is an edge for us if we are already long or short a trade and 3C is telling us that the price action is confirmed and as long as we are on the right side of the trade, to remain there, however otherwise a divergence is our sharpest edge in a trade. This is the edge that only we have, normal retail technical indicators don't show the underlying trade action that 3C does as they are based on what PRICE HAS ALREADY DONE RATHER THAN WHAT IT IS MOST LIKELY TO DO.

 The USO 15 min chart is similar to the 60 min chart in showing negative divergences at the same two former highs, one which occurred today on the gap fill target that had been posted as a likely trade opening area (and one in which we should have price alerts set if you were interested in the trade idea).

 The 10 min chart confirms the same, at this point we have strong timeframes from 10 min. to 60 min all showing the same thing or "Multiple Timeframe Confirmation" as well as the Brent Crude futures showing "Multiple Asset Confirmation".

Intraday, the trend of the 1 min chart shows the last turn to the downside, which was also the same time I started updating USO again on Tuesday April 7 with USO Update as the 3C charts which were in near perfect price/trend confirmation had finally diverged.

Today's leading negative divergence as the gap-fill area was hit, is quite clear and jumps off the chart as I require of 3C divergences before deeming to be worth the risk.

We are still looking for a Swing downside target of approx. $16-$16.50 or so, but like GLD today, Closing down the GLD May $115 Putt Temporarily, if there's a reason to take gains off the table and a probability or re-entering the trade at a better price while preserving initial gains while adding to them on a subsequent better entry without having to lose any gains do to price movement or time decay, I'll post those alerts as well.

For now, I anticipate our downside target which has not changed since posted last week. Obviously a straight USO short or a 2-3x leveraged inverse ETF may be worth following a different strategy than option trades that can suffer greatly upon changes in price, volatility and time decay.

Best of luck!

Tuesday, March 31, 2015

Index Futures Update

The following post below, Futures' Charts Update was from charts collected before today's afternoon deterioration that broke local support levels around 3:15 p.m. However the charts which were collected before 3 p.m. EDT today in "Futures Charts Update", forecasted this afternoon's events, but even more so, our Daily Wrap posted yesterday forecast events with an excerpt from our "Daily Wrap" from last night and this afternoon's, Futures' Charts Update both below...


From our Daily Wrap Monday, March 30th 2015:
"USD/JPY looks like it's going to see some overnight downside, this should weigh on the averages (overnight) 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 seems 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."

However even before that, Friday's post, 
"The Week Ahead" 
forecasted the following...

"Now a broader look at the week ahead using SPY...
This 10 min chart shows the F_O_M_C knee jerk move, the distribution in to it we expected and the complete retrace of the entire knee jerk move as I always warn, "Beware the F_E_D knee jerk move, 80% of the time it is wrong".To the far right a positive for a bounce, but no where near as large as the negative on the chart. As far as what happens after a bounce early next week, I want to use it to short in to or open puts as the bounce looks to end..."

Even posted here on Trade-Guild.net last week, from our members' site, 

Wolf on Wall Street Market Forecast... a Bounce?



Now, today's Futures Charts' Update from...


Looking at charts, I find two mistakes people generally make, the first is they look at the asset they are interested in first rather than the broad market. It's a pretty well established concept and truth that about 2/3rds of any individual stock's movement will be determined by the broad market. The second most powerful force acting on any individual stocks' movement is the Industry group; Biotechs would be a great example and before that Transports. If the Biotech Sector is hot, the probabilities that just about any stock in the biotech sector will outperform just about any other asset is very high. 

In the case of Transports, they were very hot as a momentum play and therefore any asset in the Transport Sector would likely outperform the majority of the broad market. Likewise, since transports have become one of the worst performing sectors on the year (YTD),  it stands to reason that any transport stock , generally speaking can be expected to underperform. *There are exceptions to every rule or concept, but the market isn't about absolutes, it's about probabilities. Card counting , while frowned upon in Vegas to put it mildly is establishing probabilities rather than blindly accepting the hand you were dealt and letting fate do the rest, that's gambling.

I like to think we have much better tools and many more than simply card-counting to establish probabilities as anything less is simply gambling and lucky or not, over a period of timer, just like Vegas your luck runs out, thus we look for an edge in the market and that includes the way we look at the market, sectors and individual stocks.

Much in the same way I'd look at the broad market first and determine the most likely course which helps me establish the most probable outcome for any individual stock, imagine I was in a new area of land that is unfamiliar and I wish to set up a temporary residence like a tent as I'm passing through. I want to start at the longest charts or the widest view and see what the landscape tells me, then I may narrow things down to a specific area in which I want to pitch my tent whether that be on high ground to have a good vantage point or near a watering hole to have access to life giving water. Say after surveying the broad landscape, I've determined that there's a watering hole about mid way between the highest plateau that offers me a wide viewing vantage point and the canyon floor which I may wish to avoid because I don't want to be caught in an area in which perhaps a flash flood may put me in jeopardy. So after deciding what the larger prospects look like, I've narrowed things down to an area or the intermediate term in relation to the market (or perhaps sector relative performance). Now I want to take a closer look at the area and make sure wherever I decided to pitch my tent, I'm in a safe place, perhaps partially elevated to stay dry in case of rains and off beaten trails that may be animal/predator trails to the watering hole where predators may lurk , waiting for their prey. It's just rational decision making and the same applies for the market. The last thing I want to do is nail down my exact spot which is akin to picking the stock that best suites all of the prior observations I've made.

While the example may be a bit esoteric, it's survival the same as the market. You would not believe how many people do nothing but look at a stock with little observation of the broader market that we already know has the most influence on an individual stock's performance. I don't know if it is laziness or just not knowing better. 

In any case, in looking at Index Futures, I want to start with a broad overview, determine the most likely outcome or what I often call the 'strategic outlook", then I want to narrow things down to the "tactical perspective". In the context of out example, I may choose a location to camp at when in survival mode that takes the strategic outlook which is traversing the area safely and even better, using its resources to increase my chances of a successful journey. In doing that, I may have decided that the watering hole midway between the highs of the Plateaus and the lows of the canyon made the most sense from a safety, outlook or vantage point and survival perspective. Tactically I may even set some traps on the animal trails that are close to my camp, but not in the middle of it and thus I let the natural resources come to me rather than expend energy chasing or stalking prey. I know what the probabilities are and I simply set up my tactical trap to enhance my strategic goals.

Starting with the longer term Index Futures (I can't cover EVERY chart in every timeframe, but I did my best to pick the best chart representative of all of the avergaes') to gain a broad perspective (which we have done long ago)...

Starting from the broader view with the ES/SPX E-mini 1-day futures (*ES-SPX Futures, NQ=NDX futures and TF=Russell 200 Futures*)....

 The longer term strategic outlook is worse than this, we just don't have the history on these charts to show it, but this is more than enough.

Note the negative divergences or distribution in to the September highs to the left that led to the October lows which broke an important longer term trendline and set up some potential megaphone or Broadening Tops in several of the averages.

As 2014 transitioned to 2015, note the bad start to the year in this 1-day chart which is some of the strongest underlying flow of funds (accumulation/distribution concepts) as the 2015 Macro-Economic data is the worst start to the year in something like more than a decade despite the advantage of seasonal adjustments during the 1st quarter.
Just after that divegrence is a range that as well established and VERY visible, so much so in fact that I had said well before it occurred, that the market would have to run a head fake shakeout and set a bull trap ABOVE the range before we see any significant new lows that stick, it was just that obvious and just that easy to set up smart money's larger positions so they could sell in to strength and/or short in to strength just as tAppaloosa did reducing their equity exposure by 60% in Q4 2014 or Soros' SPY put position, expanded by 600% to levels not seen since Lehaman for Soros during the same period.

These are "STRONG HANDS", they don't run at the first sign of a bounce, their positions are large, they take time to set up and they have what you'd call conviction.

In to the move above the range, note the leading negative divegrence at new leading negative lows on a very strong signal 1-day chart, right where we expected that to occur as it was a head fake/bull trap allowing smart money to unload on retail who they knew would chase the breakout and the "all time new highs" title even if the market would then be at a loss YTD only weeks later.

The divergence to the right of the chart is the most important above as it shows the level of distribution in to what we forecasted would be a head fake move BEFORE it even started, it was just that obvious.

 The VERY strong 4 hour chart of NQ (NASDAQ 100 Futures) shows the same range area in yellow and the same HEAVY DISTRIBUTION at the head fake move above. This is the kind of resistance/range breakout that retail/dumb money has been conditioned to chase over nearly a century of Technical Analysis dogma which became mainstream analysis as the Internet allowed for the management of one's own account with cheap online discount brokers. In my view this was the biggest change of the last century to the market's and Technical Analysis as it was once an obscure asset in trading and is now a mainstream liability as Wall St. knows EXACTLY how retail will react to certain price patterns / price movement and that can be used against them. NOW MORE THAN EVER, PRICE IS TRULY DECEPTIVE.

Again, the leading negative divegrence to the far right is huge.

 The 60 min Index futures' chart are important, not as strong as the Daily and 4 hour, but important nonetheless. This is the 60 min NQ or NASDAQ 100 futures chart.

To the left there's an accumulation zone where we first closed QQQ/AAPL puts that expired as MArch monthlies, a good thing as well as the market bounced from there which would have eaten up all profits in both. It was also a base that we couldn't be sure if it was alone or part of a wider base as I initially suspected as we saw the negative divegrence sending it lower (red box) and a second base area formed in the area, making it look like 1 larger "W" base. However, I see no 3C indication that this is 1 larger base, rather it looks like 2 distinct bases, each has shown signs of failing or having failed.

As the newest low was just put in place and ready to bounce Friday as the Week Ahead post indicated Friday afternoon, we haven't quite seen yesterday's negative divergences move this far out through the process of 3C divergence migration (when stronger divergences moves to longer timeframes).



 I should have posted this chart before the one above, but it too is a 60 min Index futures' chart of ES/SPX E-mini futures.

Note the first base area from MArch 11th on , the F_O_M_C on Wednesday the 18th of MArch which we warned ahead of time would likely be  a F_O_M_C knee jerk event which are most often wrong and retraced as this one was completely.

This led to the second base area from last week which was posted as most probably moving up early this week (Monday) as it did, yesterday as you'll see there was strong distribution in to the move, oe of the fastest distribution events on a bounce. To be fair, past bounces have been larger and have had specific missions like to break above the 2015 early year range and set a bull trap.

As I have said numerous times, I view this bounce as PART of a stage 4 decline as a counter trend , corrective bounce to keep the market from becoming oversold.


 And the 60 min TF/Russell 2000 Futures chart.

The same initial March 11th base (start) is seen, the F_O_M_C knee jerk reaction and the retrace of all F_O_M_C knee jerk gains sending the market to the second base area, initially suspected to be part of a larger "W" base, but I see no evidence of that now as it has formed.

Note the distribution in to the F_O_M_C knee jerk gains and the total obliteration of all gains for any longs who chased the move, they are sitting on nice losses.

 Note how I've started with the longest timeframe and have been working my way down. Each chart slightly faster than the last, each chart with slightly more detail and each chart confirming what the big picture strategic charts have shown, this is multiple timeframe analysis and confirmation as well as multiple asset confirmation.

On the above, 30 min ES chart, the distribution in to the F_O_M_C knee jerrk gains is clear as it was on all the preceding charts as is the second base area from late last week.

However note that the more detailed 30 min chart, which is still a strong timeframe shows something the others don't yet, distribution in to yesterday's gains and today's broader prices in the same area.

 The 15 min NASDAQ 100 futures/NQ also show the accumulation of base #2 and the distribution in to higher prices as foretold or forecasted in advance last week.

 This is the more detailed Russell 2000 10 min futures chart, the base area is visible as is  the strong negative 3C divergence in to yesterday's gains as posted numerous times yesterday and in to the Daily Wrap as well as post cash market futures last night.


Coming back around from the shortest timeframes which will migrate to longer ones if they are strong enough, I want to start looking at those and see how the migration period or concept has progressed being we can see the 10 min chart above is showing CLEAR distribution in to yesterday's and today's gains or relative price stability in the area.

 This is the 1 min Es/SPX futures before the afternoon stop run. Note the positive divgerence pre-cash market open which was posted in this mornig's A.M. UPDATE  which was an extension of last night's FUTURES' forecast in the Daily Wrap from last night (see the first several paragraphs from this morning's post which are the last several paragraphs from last night's Daily Wrap in which this price action was forecasted based on the ugly charts last night).

The green arrow is the North American Cash open, the positive divegrence was after overnight losses which were (again) forecasted last night in the Daily Wrap.

The A.M. UPDATE post showed this positive divergence and the probabilities of higher prices in to the cash open, but we didn't have any evidence that the market would do anything different than what it did today, such as make a new closing high.

 The ES 5 min chart was used as an example (5 min futures) that there was strong distribution in to yesterday's gains and that this bounce, as put last night in the Daily Wrap,

"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."

I purposely show the 5 min Nq/NASDAQ 100 futures to show the same negative divegrence was present here as well and this as of this afternoon BEFORE the closing sell-off that broke near term support...
ALL OF THE INDEX FUTURES CHARTS IN THIS POST WERE CAPTURED BEFORE THIS AFTERNOON SELL-OFF THAT BORKE SUPPORT AND HIT STOPS (see the rising volume in the yellow box as price broke below recent support levels on large volume). This just goes to show how bad the condition of the charts were even before the afternoon decay, in fact the charts were forecasting the afternoon decay.

 Note how the TF 5 min (Russell 2000) 5 min chart looks better than the others on a relative basis? Look at today's closing action and you'll see the R2K, the only average last night with no Dominant Price/Volume relationship, outperformed on a relative basis. 

Still, there are numerous charts above showing weakness in the Russell despite the better looking chart (5 min) of the R2K ON A RELATIVE BASIS! (Approximately 1/3rd of the losses of the other averages on the day).

 Es 7 min sees migration from the 5 min chart to the 7 min chart, again this is BEFORE the closing ugliness.

And back to where we left off as we came back around to the short term charts, the Russell 2000 10 min trend showing the accumulation area of what has been called out "Second base" and the distribution from yesterday and today as well as overnight in to the gains and relative flat price range since yesterday's gains.

In retrospect you can see now why I said well before any bounce started, "I would NOT try to trade this from the long side, but rather let the market come to you on your terms and at a time of your choosing and open or add to short positions or sell in to price strength". 

That's what the best tactical plan was considering the probabilities were already laid out on the longer term strategic charts. As such, we were in a win/win scenario as any of our core shorts would perform on downside and any price gains would allow us to open new short positions, sell longs or add to existing shorts at better prices and less risk.

Even if we did nothing and just sat through it, we had a better tactical plan considering the strategic outlook.

I'll have more on today's update and what assets we might be considering and what the near term probabilities look like now that the charts from yesterday's Daily Wrap have been vindicated as having been accurate with all of the averages closing in the red as the Dominant Price/Volume relationship as well as S&P and Morning star internals suggested as well as the 3C charts of the cash averages and the 3C charts of the Index futures.









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