After having gone through a lot of charts, I think there are possibilities that could be reflective of leaks, but this is just pure conjecture, perhaps coincidental timing, perhaps timing that's not coincidental and is also not reflective of anything more than what we expected Friday in to early this week and yesterday.
For example, you can find the expectations from both in one place, last night's
Daily Wrap,
in fact the first paragraph...
"Friday's The Week Ahead forecast started with this paragraph:
"There are numerous smaller indications that make me think we either open higher early next week or we try to put in more of a base for a bounce, but I mean bounce in the most nearly meaningless way, nothing I would trade (other than a speculative position) and nothing that would make me think that our course is going to be interrupted by anything more than some short term noise if that."
Today looked a lot like that "trying to put in more of a bounce for an early week bounce",however it's important to take the forecast above for what it is. This is the 5th consecutive red close for the SPX, with the 200-day expected to act as a brief speed bump and after that, everything changes.
It appears the retail crowd who was so bullish on Friday with the "Buy the Dip" motto have changed their mind today which is perfect for the Week Ahead (early option of the week) forecast above."
Earlier this morning I mentioned the support areas we are right at or close to as well as the SPX-200 day moving average. I expect we will slice through it like a hot-knife through butter, but very short term (and I don't mean short term like the July 10th bounce, but as in a day or so) the 200-day could easily act like a momentary speed bump.
So while there "could" be something more to all of this, we have no way of knowing with any kind of objectivity,
but what we do know is exactly what we expected as of Friday's "Week Ahead forecast" and from everything we saw yesterday, today is right on track.
It looks to me like there's some more gas in the tank, although it is strange that Index futures really bare no resemblance to the market at all beyond the FX forecasts of USD/JPY bouncing and lifting the market which happened overnight,
but at this time, I don't see any divergences in FX futures that would suggest there's more where that came from. The divergences were there, they fired overnight and did their job, but I don't expect more support from them based on the charts or objective evidence.
USD/JPY in candlesticks vs ES/SPX futures (purple). The Carry pair lifted the market on this 3 min chart, and now the two have more or less reverted to the mean. As I said,
I don't see the same kind of $USD and Yen futures signals that led to the forecast that USD/JPY would act as an engine for Index futures/the market and I think you know my opinion on the longer term trajectory of the $USD and USD/JPY.
As for the SPY and the 200-day as a speed bump, this is the daily chart, it looks like it did exactly as we expected in the commentary from yesterday linked above.
Intraday after 5-days of decline, a counter trend bounce is not at all uncommon and you can see the little "W" base that I was expecting early this week to form as of Friday's Week Ahead forecast.
As for the QQQ daily chart, I mentioned it broke below the Ascending Triangle yesterday which is price confirmation of what we knew before the bounce started, that it would be a head fake or failed breakout.
Intraday the QQQ / market would set up the best head fake with a move above what is seen as local resistance as retail is pretty fickle and will chase giving the pros the chance to sell/short in to price strength which is what we have been seeing intraday today.
I'd call this 5 min SPY chart with a leading positive divergence off the small "W" base the "
Gas in the tank". Until this chart starts falling apart, I think the market "can" put in more upside.
However intraday on the SPY 1 min where any new divergence will start, we can already see they are selling in to price strength.
Lets call this 10 min QQQ the "
gas in the tank" with accumulation of today's morning lows on volume.
Intraday the 1 min chart has shown some confirmation until prices moved up a bit and then we see selling in to higher prices.
The divergence is migrating to the 2 min chart meaning it's picking up some strength.
As it is on the 3 min chart to the far right.
Remember though, the 10 min chart represents the gas in the tank, when that falls apart and goes negative, I don't think we have much upside left.
IWM 10 min gas in the tank.
And the intraday selling on the 1 min chart...
migrating or strengthening on the 2 min chart...
As well as the 3 min chart...
And even on the 5 min chart. These will get worse before too much happens on the 109 min chart, but judging from what I see, unless some other support mechanism joins the party, the bounce ending in to the F_O_M_C tomorrow with the typical knee jerk reaction on the announcement (who knows which way?) sounds about right.
I'll bring you Leading Indicators which have been supportive of a small bounce and and anything new in Futures in the Daily Wrap.
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