Futures Update

Just as I suspected. There's still a chance for an IM bounce, maybe AAPL earnings that pop the market and especially AAPL along the lines of today's earlier update 9head fake), however all of that looks like an excellent opportunity.

As for the currencies, there are some VERY short term over-bought/oversold signals in the big moves in EUD/USD and USD/JPY today, that fits with the Index futures above maybe seeing a little bounce or a break tomorrow and that being a great opportunity to add to short market positions, although if you really don't want to be bothered with the "threading the needle", I think it's fairly safe to enter a position (market short) with a stop that can absorb some very near term volatility and you'll be fine with such a position.

Here are some examples and the main theme throughout the futures is market down hard with EXCELLENT signals.

As for Currencies...

The $USD moving down is a big part of the EUR/USD upside reversal and the USD/JPY downside reversal-the pair that has been supporting the market and in this case, moving with the market including the downside as you have seen today.

The $USD is the key asset in both the FX pairs so we'll take a look at some EXAMPLE charts, this aren't the only charts, but I look at 9 timeframes for each one so I don't think you want to se that many.

I don't have any sort term $USDX signals for a pullback or rather a bounce after today's killer move down, I can see it in other places, but nothing very strong so whatever may come of this as far as a bounce in USD/JPY or a pullback in EUR/USD, it should be very short lived and give us an even better opportunity to once again hit these assets in to some price strength with huge underlying weakness. The $USDX...

 $USDX 5 min has seen no bounce damage during today's decline so given this chart alone, I'd say more downside in the USD/JPY is very likely near term which means more market downside, however as I said, I see some VERY short term divergences that would suggest a consolidation or slight correction which may give the market some breathing room. Perhaps it's tied to AAPL earnings tonight.

 This is a much stronger $USD 30 min chart with a VERY deep leading negative divergence that confirms that last week's bounce WAS USED to close out the carry trade as well as support the market. As I ALWAYS say, price is deceiving and a lot of traders will have been suckered in to this sucker's bounce/rally which as I have said for years, is the entire point of the exercise.

 The 1 min Euro Futures is the only chart that shows an intraday negative divergence in to its biggest move in 6 weeks to the upside (EUR/USD up), so this looks like an overnight/maybe tomorrow correction in the EUR/USD, it makes sense to assume the same for USD/JPY which again sets the market up for some excellent positioning in to some price strength ,  but severe underlying damage.

This is a 7 min chart of the Euro futures leading positive, absolutely no damage done to the divergence today and is pointing toward more price action in the EUR/USD such as we saw today.

 Even stronger, the Euro futures 60 min chart with a MONSTER positive divgerence. Remember the Euro has trended down during the market bounce so a reversal in the Euro up and $USD down, should equate with the broad market down, although unlike USD/JPY, EUR/USD has an inverse correlation with the market.

 And this is the 5 min Yen Futures, I don't see anything suggesting a near term correction or pullback other than price's parabolic move today, but a pullback short term would only strengthen this and weaken the USD/JPY which the market has been following like a puppy. I have to go with the 1 min euro chart and price action itself. Otherwise, the Yen looks set for more upside.

Nearly 2 years ago I wrote that "When the market breaks down, expect to see the Yen rally".

And this is a much more important Yen futures timeframe of 30 minwhith an exceptional positive divergence. so today''s USD/JPY decline which pulled the market lower looks to be the VERY TIP of the iceberg.

As to Index Futures, Again there's very little that would hold up on anything much more than some short term (day maybe) chart noise, but it may give us another, excellent opportunity to add additional or new positions in to somewhat better prices rather than chase them lower, with severe underlying damage.

The best I can find to support a market bounce or at least a break from a big downside move immediately would be...

1 min charts like ES which have been in line with earlier downside and now have a slight positive divergence. This isn't anything surprising given I have expected a bounce in the IWM.

However there's nothing of any credibility after that other than some 5 min charts NOT in position yet. That statement is not entirely accurate...

 This 5 min ES chart is actually negative, but not to the extent of the NQ 5 min chart below. Remember, this is the timeframe I rely on the most for position timing.

Compared to the NQ/NASDAQ futures 5 min leading negative divergence above, ES could do a little more work and a slight corrective bounce in the market could allow it to do that.

As for the charts that matter, the strong underlying trend, here's several examples in multiple timeframes just to save space, but they are overwhelmingly negative for the market.

 NQ 7 min, I trust  I don't need to point out the divergence and tel you that a shorter term timeframe means a closer move.

 TF/Russell 2000 15 min

 ES 30 min

YM/Dow futures 60 min

And just so you know this is a very strong negative signal and a very close one, not some week long bounce and then a short opportunity... Here are VIX futures...

 We rarely see VIX futures post divergences out this far at a 60 min chart and positive, remember they move opposite the market so this is market negative.

And as for timing, this is VX 5 min which means any kind of possible bounce/consolidation we might get that would be more ideal for entries than today, would be very short lived as VX is ready to go on the 5 min timing chart.

Just as we saw yesterday that started playing out today, we really haven't come close to touching the very negative signals on the longer timeframes, but we are moving in that direction and I would say we have likely already transitioned from stage 3 top of the bounce to stage 4 decline.