After a somewhat ugly overnight session in Asia with the Shanghai Composite down -.72%, Hang Seng -1.06 and the Nikkei -2.22%, strangely US Index futures were having a pretty good run until Europe opened.
To sum it up, the safe haven German Bund dropped to a fresh record low of .715% while the periphery of Europe saw yields explode, take Greece for example with a 100 bps climb, NEAR 1% MOVE NEAR 9%, THAT'S ABOUT 200 BPS THIS WEEK ALONE.
APPARENTLY THE CATALYST WAS A FAILED SPANISH AUCTION, OR AT LEAST ONE THAT FAILED TO SELL THE MAX. TARGETED BONDS. That doesn't really hold that much water with me, but either way Portuguese, Irish and Spanish bonds all saw yields jump between 20 and 30 bps.
At last look the FTSE was down -1.74%, the DAX -1.59% and the CAC-40 -2.22%.
The US 10 year dropped below 2%.
Oddly yesterday's higher ES volume is 180 degrees opposite today, From NANEX ...
The orange line in the center is yesterday's liquidity in the E-mini's, the purple is today's thus far.
As NANEX points out, "Low liquidity doesn't make the market go down, it makes it volatile which stresses the system".
So prepare for just about anything, if you though yesterday was volatile, take the IWM's drop and pop, today should be even more so, this is why I said volatility and unpredictability go up as we move to a stage 4 decline.
As for ES futures, they look the same as NQ and TF...
You can see the negative 3C divegrence in to the highs overnight and a positive in to pre-market.
So hold on, this is going to be an interesting session. I'm still on track with what I said yesterday, until we get stronger signals than yesterday which were decent, I'm fine with my level of risk (mostly cash with 2 partial positions UPRO/FAS).
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