Opening Indications

Good morning.

As expected in last night's futures update,  most every asset with a negative divegrence on the opening of futures carried over from Friday, sank lower in overnight trade, not the least of which, the USD/JPY...

 USD/JPY coming down off last night's negative divergences.

Although the USDX negative divergence did come down after adding a bit more upside after the post...

 As you can see above (the yellow box was the time of the post), and the USDX with a small positive divegrence right now, most of the USD/JPY pressure seems to have come from the "in line" Yen futures last night...

 Yen overnight

As for Index futures, they too came down as their negative divergences suggested, most are in line at the open, but as we know we'll likely see volatility, especially after a weekend with limit orders coming in...

 ES1 min overnight in line now.

TF negative overnight with a small positive divergence.

 NQ futures also came down and are now in line.

The template for what seems to be happening is best viewed on 30-60 min 3C charts of the Index futures, it looks like a bear flag with the initial weakness coming from the week of Black Friday with a sharp decline when futures opened last Sunday night and in to Monday morning with the market seeing a selling climax by 10:30 a.m. and a short term oversold event occurring which we saw by 10:30 and expected a bounce off the short term oversold last week which we saw. Now it looks very much like a small bear flag as trade once again weakened toward the end of last week and looks like 3C is calling for more downside, although the very short term trade may see some typical chop and perhaps a head fake move if the market views this as a bear flag-like pattern which I doubt too many are seeing.

 60 min ES with the week of Black Friday seeing late week 3C negatives and in to last Sunday's decline and Monday morning with a bounce last week and again weakness in 3C later in the week, this is not the best view of what looks like a bear flag.

However NQ (30 min) shows the same divergences as ES and following the yellow arrows of price, the bear flag look becomes more evident as does the 3C confirmation of such with weakness building in later in the week after the bounce off Monday morning's early selling climax.

TF shows the same, weakness in to Black Friday with a sharp drop and quick parabolic drop creating an oversold (high volume) condition with the bounce we expected by 10:30 a.m. last Monday with further 3C weakness in to the end of last week after being no better than in line on the first day or two of the bounce which looks a lot like a small bear flag.

I expect this pattern to be the most likely to play out with additional downside weakness, however in the very near term, hop should be expected as usual and perhaps even a head fake move, although we'll have to check the 3C charts of the averages as the morning progresses.

Asia was rather strong, the Shanghai Composite up +2.91%, the Nikkei, even after worsening GDP data at +0.08% and the Hang Seng +0.19% while Europe is weaker, the Dax at last look -0.53, the FTSE 100 -0.89% and the CAC-40 -.91%.

I'll update the averages as soon as opening trade settles down.