Snapshots - all that glitters is not gold

Here are some thoughts about current market status.
While many big players will be on holiday , an interesting topping pattern may be on the final resolution phase. It started on Monday and while price has been ranging, some other indicators have been sliding which may well be the clue we are looking for to anticipate the upcoming resolution for this pattern.

Gap play

Ok, I hope you enjoyed shorting the Big names today. They performed as expected and might have initiated an important move as of today.
ES, gave us 10 more points after last post in wich we spotted a partial covering zone. 
I still believe the bearish move is alive and kicking but it needs a retracement. Things get complicated since there still is a 1037.25 unfilled gap that claims for a fill during regular hours, otherwise the path should be stright up (bounce).
Expected alternatives are described in the chart but even if a VST bullish move to (say 1067-1074) area comes, it will be only a pullback inside a bearish move.

Black border

See previous post for comments.

To the tick

ES bounced precisely from defined levels just to the border of 1039-45 area ,once it took out the resistance level (blue tinted). Mc Os did cooperate with a bounce as well. We can expect some more penetration into 1049 level today but basically the strongest part of the bounce is already done. Only if 1045 is taken out with authority bulls can recover control.

So far so good

Finally bulls had the expected bouce and even surpassed ES1056 area. But as they didn't close above ES1060.5 we still can expect the continuation of the bearish move towards ES1028. If 1060,5 is taken out tomorrow then the target for longs is near Es1090 uffff!:)
Regarding GS setup obviously was bought today but as well as SPX bulls have not yet crossed the key level so bearish stance remains.

We will be looking currencies tonight for more clues on tomorrow action but bears need ES dropping below 1054 quickly to maintain hopes healthy



As another proxy you can use is QM, which is serving us well as indicator. Now we have clear references for the ST:

Daily wrap up 08-31

As we were pointing out at the Market internals update when ES was around 1021, there were a high risk of penetrating 1016 and then continue to the down side. Finally 1013 provided support and I believe the strong EURUSD reversal together with a weakening JPY put the ending for the selloff. The close was stronger than I expected in terms of price but increasing NYSE down-volume during last 15 mins makes AH rise less likely. In my eyes there is still a remote possibility of a sizable gap down tomorrow bt even if it occurs, remember is 1st day of month (higher probabilities of a green day) and we are due for a pullback to the upside.
GL

Daily wrap up 08-25

Finally the pattern we were observing unfolded bearish in the afternoon as expected. Though a close look at volume was revealing weakness since yesterday night I think many bulls got trapped by the green spike at 10:00 EST.
Other factors that contributed to this bearish move in the afternoon: Bonds rose (TNX -1.26%), Oil dropped around 4% and EURUSD close in red after testing 1.4330 level for a few hours and also left a disturbing doji candle. As of 7:23 pm EST is opened and evolved red dragging equity down (ES at 1022,5 now)

The OBV above commented pattern, together with the weakness at the close make us think this retracement will continue tomorrow. Oil and currencies opening on 08-26 (EU time) support the ST bearish bias for tomorrow

08-24 Daily wrap up (updated )

As we were saying at Seeking the unobvious, many instruments were showing relative weakness and diverging from SPX and other indices. This and other factors led to a retracement today.

Regarding the next steps: Many bears are excited about the shooting star candle this close set on many US and EU indices. I think a little more correction may come tomorrow but wouldn't bet on the bear case for too long since the main trend is bullsish. EURUSD flirted with the key level we identifyed previously, surpassed for some time but failed to close above (correlation with stocks remains high).

Anyway, I will post an integrated vision tonight, so stay tuned:)


Take a look at the updated NQ chart for a nice sum up pic which is also a good example of the 1,2,3 Reg channel move:





Note aside: I was reviewing ES charts with some other indicators since there were some volume spikes that looked suspicious, this is what I found. I am not sure it is what I think but no wonder it looks bad for bulls in the ST.

Regression day II - Completing the move

As we recently posted , many instruments have broken its mid term regression channels. We spoke about the technical relevance of that fact and also described at the charts commentary that after the 1st step (channel breakdown) 2 more steps normally follows to complete the move :

• 2- Retest the channel or any relevant resistance
• 3 - Break down again

This is what we saw today at many instruments (see updated charts below)


EURJPY


EURUSD


S&P100


ES





Another perfect example at QM (oil future)



Conclusion:

The various indications we were observing about more weakness in the bulls run have been confirmed today in various equities sectors as well as oil and gold. We see this move as the beginning of a pullback inside a bullish main trend. To believe this pullback has become some serious mid term bearish trend we need to see a daily close below ES990, which was very close today but is yet to be seen. There are quite a few technical arguments for the bears but need to gain consistence during next week for us to officially turn the mid term trend to bearish.

Daily wrap up - "Regression" day

We finally went back to some bearish dynamics today after a number of the signs of weakness we have been observing matured. As an interesting technical hint, many of them broke their rising Regression Channels, which is meaningful from the mathematical point of view by itself, but moreover since it happened the same day to many of the instruments whose performance we believe is linked
We think this is a pullback which can eventually become a mid term trend change if ES makes a daily close below 990. In any case the main trend underlaying is still bullish.
The plan for today is stay on the sidelines and wait for a confirmation of this move after FOMC anounces.

ES


EURJPY



EURUSD



SP100

Daily wrap up

Today we had another shallow day at the stocks markets. Most indices couldn't make new highs and the overbought condition and thick resistances discouraged bulls to push higher. See the NASDAQ chart below to see what happened with the "toppy" levels (2016) we were talking about.



Worst performers were real estate, industrials, financials and techs. The sector showing relative strength was health care.
Oil moved sideways today and I still expect some retracement in the short term.
Euro didn't retrace from the last leg down as expected. This should be seen as a continuation of its direct relation with equities indices. Last Friday it detached going down hard while indices rallied so I expected some correction on Euro which didn't happen . Instead they seem to start walking together again (will post some charts about currencies correlation later to clarify this popular issue).
Meanwhile, keep an eye on EURUSD trendline (see chart). After a fake break of bearish trendline and topping at previous high (white line) it is just holding on the edge of its mid term bullish channel.



EURJPY and Gold also showed weakness.
Bond prices did recover some of the huge Friday's drop.


Regarding market internals, I continue to watch them to assess the strength of this bullish trend. Though main internals are still strong, some incipient signs of exhaustion could be found: