Correlations

I've been talking a lot recently about correlations coming unhinged, I meant to point this out earlier, but was too busy.

The EUR/$USD

 The market has been tracking the EUR pretty well as there's an inverse correlation between the $USD and stocks. Look at this huge move in the EUR earlier.

Here's the SPY in Green and FXE-Euro ETF in red, no correlation whatsoever. This also happened to be the time we had a flat trading range and a positive short term divergence on the SPY and other market ETFs. If I had to guess, today was an accumulation day, clearly the market knew what to expect out of the Fed when you look back at my 12:45 Treasury post. So I'm guessing we may see a gap up in the a.m or some strength build in the market at some point tomorrow, this may be our re-entry on the short side, at least for a new low.

Both the DIA and SPY held a positive 1 min divergence into the close.

 DIA 1 min

SPY 1 min.

My guess is Wall Street is planning a little surprise for shorts tomorrow, however, that doesn't mean go long, we are just looking for a high probability, low risk entry.

I've heard from a lot of you and you stuck with some very hard trades this week so far and made some good $$$, I'm glad to hear you didn't give in to emotion.