More near term and long term evidence: Futures, FX, Treasuries and Volatility

Futures have had strong 3C underlying trade, in fact so strong that the signals for intraday trade have all come from the typical market update favorites: SPY, QQQ, DIA, IWM, etc.

We are just now seeing some softness in the short term 3C charts for futures like the S&P and NASDAQ mini futures (ES and NQ).

Here's a look at some different timeframes (trends) in the futures arena as well as a look at the FX markets that have a high correlation to market behavior.

 ES 1 min is for the first time today starting to show a decent size negative divergence, we'll see how the European open effects futures in about 5 hours, I'm inclined to think we'll see some softness by the US pre-market trade.


The ES 5 min chart has been strong since the move up started, while there have been a few minor negative divergences, this is the first that is starting to lead to the downside.

 ES 30 min is where the strength for the uptrend I've been talking about, is ultimately coming from. This is still a strong chart, that's why I think even with a decent pullback, we'll see more upside before this is over.

 NASDAQ/NQ

 NQ futures started off the US session with a positive divergence, that faded near noon time and around the time I said to watch for a pullback and closed long/leveraged ETFs.

The 5 min NQ futures are showing a little more recent weakness, I believe this is the rotation from Tech yesterday to Financials today as the SPX has more exposure to financials and the NASDAQ to tech.

The 30 min NQ chart shows the size of the positive divergence, not only is it large compared to the negative divergence, but it also needs to turn negative before the market is likely to turn. It appears there's a lot more upside for smart money to sell in to, as I've said, I think the move up "JUST" got started.

FX-EUR/USD

 5 min chart since this Sunday night's opening, it's apparent that the ROC is definitely falling off, while this isn't a great leading indicator, it is a good confirmation indicator.

 The daily EUR/USD shows some resistance nearby, this is exactly what could cause a pullback, the market needs to gather some strength before attempting a break through resistance, this has some correlation to the stock market.

AUD/USD

 5 min AUD since this week's open, this is more of a leading indicator and while it's losing some momentum, it's still in excellent position.

On the daily the June bottom that matches the stock market's June 4th bottom is clearly visible as is the uptrend working in to the QE3 announcement, since we have seen a longer term breakdown in this leading indicator, this matches up very well with our market and different trend expectations.

As for some other near term and bigger picture indications...

This is TLT, Treasuries, a safe haven asset that typically trades opposite the market, so a positive divergence in TLT would have a correlation equal to a negative divergence in the market averages, we check assets like this for confirmation.

 TLT 5 min is in a leading positive divergence, this suggests TLT wants to move higher, remember the market moves in the opposite direction so the near term pullback idea seems to hold more water.

 Here's a closer view, as the market averages have been turning negative on an intraday basis, TLT has been turning positive, this is confirmation and again gives more weight to a near term/short term pullback.

 The long term/big picture TLT 60 min chart is in a large leading positive divergence, this is confirmed with the market averages having a negative divergence in the same timeframes, essentially giving more confirmation of a bearish big picture for the market.

VXX/Volatility indicators.

These also move opposite the market.

 The last 2 days we have been seeing market short term charts turn negative, at the same time we have confirmation as VXX and UVXY short term charts are going positive, this may even be a quick trade you might want to consider, but it is for a market pullback only in this case.

 The intraday UVXY 2 min chart is also showing a strong leading positive divergence suggesting VXX and UVXY see upside, remember the market moves the opposite direction so our consolidation that has been lateral looks more like we will see some price pullback.

Finally the 4 hour VXX chart is leading positive in a big way, someone seems to be accumulating volatility, this is a positive signal in a big way for volatility, remembering that the market trades opposite these assets, this is more confirmation of the market averages' 4 hour negative divergences or essentially the big picture. This gives us more confirmation that the big picture, the primary trend is likely to turn bearish.