Yesterday we indicated in "the lounge" that either early AM highs were dominant and likely to lead to closing near the lows. A bounce into the Open would likely lead to opening highs with a reactionary drop into midday area and strength in the afternoon. The anticipated bounce are mid-day was attempted but failed and reverted highest probabilities to the former scenario. Today is again another similar session - however with less upward potential organically. Therefore, be alert for AM highs and potential stabilization attempt into the noon area once again. If noon stabilization or bounce attempt fails then it is likely again that market may be leaning towards a weak afternoon once more.
As a note of reminder, the reason we made such a large effort to educate regarding impulsive cycle and eTickTool Extreme breaks was specifically because the market is on drugs, as it were, and may go on wild trips. Please continue to pay attention to the impulses with a keen eye and feel free to ask any questions regarding identifying them. Yesterday's impulses that nested up were tremendous as were the impulses that nested down and suggested that a downside risk was not insubstantial.
Also, note yesterday had positive buying via large share trades as shown via our cash add and withdrawn index. Once the intervention attempts were overwhelmed by the apparent advance knowledge of Brazil (emerging markets downgrade)and China Yuan devaluation, this index went negative for the first time during the day and risks also turned decidedly adverse for a larger bounce. This index is very important and an easy way to spot successful or failing intervention attempts or for that matter convicted buying or selling by institutions.
We would like to remind that the weekly MSP propensity is, as we see it, currently in a period of large volatility chop/consolidation and requires a break or failure. We feel that the most likely scenario remains a break to the upside somewhere in the vicinity of the week of the 21st which then fails into a 5 to 6-week downward bias. It is easy to get bearish too early while it appears that the market has work to do.