Thursday, November 3, 2011

I'm Guessing a gap down tomorrow

And probably an ugly AH ES session overnight. Here's why.

 This is the last few hours of EUR/USD trade, but note the end, straight down.

 The market rallied and the ES/EUR/USD correlation dropped to the negatives, seems very much like a last minute push to juice the market as much as possible.

Here's the ES chart again with volume and you can see the volume surge at the EOD in the last hour, really through most of the afternoon on a very negative divergence. My gut feeling is a large number of shorts were set up sine about 1-2 p.m., the time before that was distributing the accumulated position in white.

With Credit leading the what lower and both the market in general and ES specifically out-performing the risk basket, it seems as if this has been a fairly obvious underlying countertrend trade, or in other words, the strength was used to short ES/the market.


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