A.M. Update

Good morning.

The Chinese super momo move in both mainland, but especially Hong Kong has finally taken a break with Shanghai +30% overnight and the Hang Seng -1.6% for an actual loss.

Also as suspected UK CoreCPI data came in light, below consensus.

In a absolute, "You got it wrong" tap on the shoulder flip flop, Japan's PM Abe's special advisor, Hara, who said yesterday that the $1.05 level for the USD/JPY was appropriate and he didn't see the Yen weakening much more apparently changed his mind or had it changed by someone this morning when he came out with a statement that USD/JPY $1.20 was acceptable and he wouldn't be opposed to further BOJ easing (seen as weakening a currency even more), so yesterday it was a message of Yen strength from Abe's advisor, today, "Well maybe not that strong. The funny thing is the market's reaction to Harada today.

 This morning's USD/JPY reaction, initially up (Yen down) on Harada's reversal and then the market decides to stick with the original message and turn back down less than an hour later.

In doing some research on the Yen and the current carry trade, I've come across quite a few comments about Yen strength, which is something I've been pointing out as we have seen 3C positive divergences building as well as a long term bias that I've had for several years that when the US market really is moving to a primary downtrend or bear market, Yen strength will be occurring at the same time.

As a reminder, the Yen trend in price and 3C on a strong Daily chart...

The price trend has gone from down to lateral and the 3C divergence from in line at the downtrend to leading positive at the lateral trend, it looks like a large base being carved out for a move higher as anticipated.

We've also seen some shorter term strengthening in the Yen, one of these shorter term bouts of strength will lead the Yen out of this base.

EUR/USD (a former/partial carry trade) I just saw this morning touched 2 year lows. With my larger expectations of primary trend $USD weakness building, this should weaken the USD/JPY pair further as well as have a gravitational pull on the broad market.

It hasn't just been the Asian markets seeing some downside overnight, but at last look Europe is largely red.

Crude looks to be moving closer to our target range and it has the divergences we want to see.

Brent Crude futures 5 min with leading negative 3C.

While Gold continues to move in the direction of our recent Put position Friday.

Retail Sales in the US missed for the 4th consecutive time, making it the worst string of misses since the Lehman era and the first consecutive drop since Lehman.

Otherwise for our larger market based purposes, the Index future chart as I showed were starting a negative divegrence on the 15 min charts yesterday, there's still some work to do between the 3 timeframes of 7, 10 and 15 min, different averages have different timeframes covered, but all 3 or 4 major Index futures don't have all 3 timeframes covered, I suspect that's something we will see on a downside pivot.

I'll be watching out for these today as well as further deterioration in Leading indicators, a bounce today would be helpful in getting that done since my wishlist of a Bearish Engulfing candle isn't coming true today (It was just a hope, no objective reason to believe it would happen), however we have stalled more or less in the area which is part of the reversal process. If you recall the best guess scenario I drew last week in candlesticks, it wasn't just strong days up followed by a strong "V" shaped reversal down, but the typical small bodied candles at the top that are reminiscent of a reversal process, there's usually a head fake move in the reversal process itself, that's the ideal area for puts broadly speaking.

Otherwise, thus far you can see the candlestick reversal process I'm talking about...

This shows the roughly lateral trend starting to develop, I expect to see a bit more of this, sideways chop in the area, maybe a head fake move of this little range if it becomes very defined.

I'll be posting any positions I think are ready as some will likely be ready just before or just after the market. Financials I'm very interested in, but we are right in the middle of Financial earnings this week, but I've seen a number of other areas, the Dow mentioned yesterday that look nearly bad enough right now. Either way, we have moved almost exactly according to expectations not only in price, but in underlying trade, Leading Indicators and Index futures' underlying trade which is a good sign that our forecasts based on highest probabilities are working out as expected, making it easier to plan ahead, but planning ahead rather than reacting instantly to price requires a bit more patience, but it's well worth it.