Market Update

You recall my video last night, the scenario I was trying to explain, well in addition to all other assets acting in a TAPER OFF / RISK ON manner other than Gold/Silver, I also now have 5 min positive divergences in the $AUD and Euro, the $USD as you know from the last post has turned negative.

Last night I was trying to communicate that there's almost always a goal behind a market move, like when I said, "That Bull-Flag didn't appear by chance " yesterday. I explained the reason as well, the hundreds of beautiful short set ups that are just 1-4% away from near perfect entries, but more than that, from the kind of demand (higher prices and volume) Wall St. needs to position in the size they trade, so I haven't changed my tune at all since August when the accumulation range started forming, I'm saying right now and last night the exact same thing in August that I thought would happen and thus far has.

As I showed last night, we also don't need a lot, we don't need a renewed market with a 3 week uptrend, we just need a few key stocks to move and this is why the Yen was interesting.

SPY Arbitrage is already being used today which has to tell you something (as it has been used nearly all week) about the lack of strength in the market itself.

Today's SPY Arbitrage is again activated like yesterday.

However, maybe the most insightful chart was that of the Yen. The importance of a positive divergence in the $AUD and Euro is that if the move to the upside strongly on the 3C 5 min divergence, then they can cause a carry cross to move up like AUD/JPY or EUR/JPY. For this to happen, the Yen needs to either move DOWN or move up a lot less slowly than the other currency (AUD/EUR).

Here's where it got interesting, the Yen 5 min is in a positive divergence, but also at a low as if it is in a reversal process. The 15 min chart is positive too, but the 1 min chart suggests the Yen falls back toward the bottom of the most recent range where it's creating a reversal process, this would give the carry pairs a short window to move up and push the market as that's what they are used for since they truly died earlier this year. However when the Yen recovers and starts accumulating and moves up on this reversal process, the carry crosses will likely falter and market support will be gone.

In other words, there's a short window forming for a market move to the upside, but it is capped by the Yens likely larger move to the upside coming, it's just near a downside correction to build a larger upside reversal base and that correction is what the market can use as an engine to push it as shown last night.

It really doesn't look like HYG is interested in sticking around much longer, the distribution process there is already well under way so they're about to lose SPY arbitrage capabilities to support the market as well.