SPX Minute Chart Yesterday's Afternoon Session Oversold Falling Wedge Positive Divergence Inverted H&S Overbot Negative Divergence

Here's the SPX in the final couple hours of the Thursday session yesterday. Remember around 2:30 PM and 3:00 PM we were looking at the TRIN moving back to 1.0, the SPX broke the 1262 level but with no authority, the SPX did not even go down two additional points to test the starting year SPX number, volatility filled the gap and was starting to trail back down, and the SPX daily chart was showing positive divergence with a couple of the indicators, so add all this up, and considering all the recent selling that has been occurring, it was feeling a lot like a bounce.

As that occurs, if you watch the minute charts, you can see how price came down into a falling wedge at that time, indicators were in or near oversold territory, and positive divergence was in play, as shown by the blue lines above.

Note the inverted H&S as well shown by the green lines that targets 1270. The teal line shows the RSI saying that it wants to see another higher high with price, and this occurred five minutes before the close, which then clicked off the negative divergence shown by the brown lines, spanking price back down the last couple minutes to close the session. Overall the indicators have a sideways feel and considering the H&S targets 1270-1271, a move to at least explore that area would be in order. The TRIN printed a 0.88 so it had come back to one and then fell thru one into the close verifying the bullishness late day.

Next week is a bear week according to seasonality so it will be interesting to watch this afternoon's trading to see how traders position themselves into the weekend.  Typically, markets are buoyant Friday afternoons due to shorts paring back positions; event risk over the weekend are typically positive events so a short position leaves a bit too much exposure.  With OPEX, markets tend to open Monday the opposite of the way they will move into the close today, so this is in the mix as well.

Markets are very much held hostage by the Greece affair currently.  Any resolution on the matter, which will amount to more papering over of problems, will buoy the equties markets and reinforce a mini-rally. Simply have to see how the day plays out considering the factors above, and watching the TRIN, TICK, volatilty, the minute charts, see the direction of trading the last couple hours, etc..., to go where the waves take you.

Interestingly, we are in these Bradley turn windows currently; the actual turn dates are 6/15/11 and 6/22/11.  Thus, if you allow 4 to 7 days on each side of the turn dates to create a window for a broad market turn to occur, the windows are 6/8 thru 6/22, and, 6/15 thru 6/29.  Note how the 6/15 thru 6/22 area is the overlap of two windows, which does not occur often, the turn windows throughout the year are typically separate from each other.  So watch out for some voodoo in this period the next few days.  The market trend was down, so a turn would typically mean market would bounce, and then followed by another turn would be down again. The full moon was mid week, which typically does buoy equities markets as it did this time.

All of the tools above are simply a way of gauging the undercurrent of the markets, since it is always easier to swim, and trade, with the current rather than against it.  Projecting daily market moves are always folly but the feel would be an up day today, traders will probably start to sniff out a resolution to the Greece affair, perhaps some afternoon weakness for folks thinking that next week will see trouble for the euro, so they will put on some trades.  With a down move into today's close, that should set an up Monday morning, then as next week plays out the seasonality for the week after June OPEX would kick in and the market would weaken again next week.  But, as always, you simply take it minute to minute each day.