Monday, June 24, 2013

The New Week, Futures

Taking a look around initially, it doesn't seem like much is going on, for instance take a look at the 1 min 3C chart for ES (S&P E-mini Futures) since the open this week (Sunday).

 ES 1 min since the Sunday open of Futures (green arrow), there's a small positive divergence, that doesn't tell us much in a long overnight session EXCEPT that lower prices (a mellow drift lower) are being accumulated.

NQ NASDAQ 100 futures look the same, they are seeing some 1 min accumulation in to the slight drift down.

You know how I always say, "If you can't make out the trend, keep backing out the timeframe and look at the bigger picture...

Here's NQ 15 min, this is where all of these small positive and negative divergences will accrue and we might be able to make out a trend, IF there's something there.
 NQ 15 min starts to flesh put a trend in 3C, you can see the process I talk about in price (a reversal being a process, not an event).

15 min TF (Russell 2000 Futures) look similar.

I decided to back out a bit more...
 The 30 min ES chart is a much stronger timeframe than anything above, it's a fairly strong timeframe for a reversal and suggests some pretty heavy activity if there's a trend there which there is. This is the inverse H&S formation we talked about Friday under support at the yellow trendline which makes sense because that's where shares will be plentiful either from longs selling or shorts selling to start a position, either way, it's a better price point and more importantly the supply Wall St. needs is there.

We have a leading positive divergence.

NQ 30 min shows the same, so in my view (same as last week), it's not really a matter of if, more when (which I think is just about anytime as the process is pretty advanced considering volatility) and the other question is "How", will there be a final head fake move, a gap up, something else? I'm pretty sure Wall Street isn't going to just make it easy unless they want to encourage retail to jump on the ship, if they make it easy, they are like the vampires inviting you to dinner, but we can still play the move.

The only question I really have from last week is, "Did the USD/JPY carry trade flip 180 degrees just because of the F_O_M_C statement and temporarily or did it really flip for good and we are back to the historical $USD legacy arbitrage?" If the latter is true, then the last of the carry trades is finished and I suspected that was the case being we put in a "Key Reversal Day on May 22nd that we haven't traded above.

It seems I have my answer which makes my two articles, "Currency Crisis" which are linked near the top right of the member's site, are right on track, it means all the way back in April the market was telling us clearly how things were going to end.

 The $USDX 30 min chart shows the positive divergence I talked about the week before last, it took off like 3C said it would, it just happened that when it did, its correlation with the market suddenly changed 180 degrees in a single day after maintaining the same correlation for 7 months straight.

The negative divergence in place now suggest the $USD falls, the market rises, this is the opposite of the last 7 months until last week, but it is the historical correlation.

To confirm this, the Yen "Should" have the EXACT OPPOSITE signal....especially if my April articles were right.
And the 30 min Yen, CONFIRMATION, a leading positive divergence, the USD falls, the Yen rises, the market rises (for a short time any way) before we finally crack, why "Finally"? The last of the carry trades is over, it's closed, that means any positions smart money was financing with the carry were closed out, then the carry was closed, this is why it flipped 180 degrees, it's impressive though how coordinated the move to close the carry was.

In any case, we have a strong edge, clear signals that we didn't have this time last week and a very strong trend as well.

So much was pointing to this late last week, credit, divergences, VIX futures, etc. I'd try to go back and look at some of the market updates and Leading Indicator updates, all of the clues were right there.

Since Capital Context uses Carry Trades as part of their ES CONTEXT model, they had to re-callibrate their model to account for the end of the USD/JPY carry trade ending last week. Even though they re-callibrated the model, the ES model is still moving up.

We'll have our move. I suggest you start thinking about filling out your short positions, of course we have positions we want to take advantage of and make some gains, but the big picture is here, you really need to back up a lot to see it because it's no longer off in the future, it's effectively here now.

I'll be providing ideas of course.

See you in the a.m.

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