Market Strength Follow Up

The market is stalled again, I mentioned in the last post that a move above the psychological level of $1700 would normally be more than enough to create follow through, but in this case you have to consider who is buying and who is selling and we've seen that from Bloomberg, although 3C has shown us that long before Bloomberg published it, Institutional money are huge net sellers, retail are huge net buyers.

The retail sentiment update from today was as follows (Thanks again Sam)...

VERY BULLISH SENTIMENT

Hi Brandt,

I think this tweet says it all:

"Don't have much cash on books (nearly fully invested long), but with what's left, if gains hold up, will sprinkle some more in today"

Moving forward from there, you can see there's no steam in the market, but the engine is exactly as I suspected, the USD/JPY pair. I'm not sure the pair will hold which leaves HYG and it just took another drop lower.

 The red and green candlesticks are the USD/JPY pair, that means $USD long and Japanese Yen short and the pair moves higher. 

In Purple we see ES (S&P E-mini futures). This is an intraday look, you can see the timescale at the bottom. Note that the market (ES) doesn't make ANY moves higher without the USD/JPY PULLING it higher (white arrow).

The obvious answer would be the USD/JPY works ES overnight to get to that level I showed in XLF, but numerous other assets as it benefits Wall Street to have a bear trap in place, if there are even enough bulls (retail) with cash to buy.

Looking at the USD/JPY pair, it's hard to say so I turned to the individual $USD and JPY single currency futures.

The $USD 1 min fell, this is why the pair froze as well as the market, but as you can see since 2 p.m. there's been an effort to move the $USD higher and the pair and market with it.

The 5 min $USD, a more serious chart doesn't look very good either, if the USD falls, so does the pair most likely and the market, unless they can really juice something else like HYG.

This is the second half of the equation, the Japanese Yen, for the USD/JPY to rise and the market to follow, the JPY has to fall, but as you can see, it's starting to build a positive divergence for a likely turn around, taken with USD charts, probably not good news for the pair or the market.

 This is the 5 min Yen chart, it also has a leading positive divergence so it looks like this pair is going to have a lot of trouble moving higher, which means the market will as well as it is this pair that has been the engine to drive the market higher, not real demand.

 This is HYG since the last update and it has broken lower through another layer of intraday support.

This is the larger picture, HYG has been used to support the market, but today things started changing in a meaningful way.