Market Update

I hope you have been phasing in to short positions on price strength since April 10th, I have set up several equity short positions, if you haven't as mentioned last night, the volatility should remain high, this is early Monday, we have a lot ahead of us, especially tomorrow and Wednesday. With the way the long term charts have been breaking down, as I have warned, we are closer and closer to a break of the ledge that is unrecoverable. Is this it? It feels like it, but as I mentioned, it's early Monday.

If you had a chance to skim through the news events mostly out of Europe, you'll see why the global markets are red today.

 Here is the relative quiet of Sunday's FX market open in the EUR/USD in green, you can see where EU data started coming out. No hour or 30 min 2 min divergences from Friday afternoon would stand a chance against that kind of Euro weakness and dollar strength. There are some reports that China is trying to maintain a bid under Euro $1.30 to support the currency so Chinese exports don't become too expensive.

 Interestingly in ES, there's a very sharp negative divergence, leading, just before Europe opened, since price didn't immediately follow, I would dare to say that there were leaks, just what was leaked, who knows, there's so much from government breakdowns to economic reports, but there was a clear, very strong bout of selling BEFORE ES broke down closer to the European open.

 The DIA Friday 2 min pos. divergence and what I mentioned in the last post as some signs of stability in the market materializing, it's hard to say if the Friday divergence will be taken as a loss or whether a larger divergence including Friday's will be carved out. In the latter situation, they would need one heck of a volatile day up to recover Friday's short bout of positive divergences. There's another scenario I have thought about this morning, since the SPY close on Friday was so specifically targeted to take out the massive increase in Calls from $138-$140, they may have supported the market a little as the seven cent close below $138 would make many of the Puts at $138 in a near useless position, although they would have made the strike, when considering premiums and transaction costs, the $.07 probably would not be worth it, essentially making the $138 puts virtually useless unless exercised.

 IWM 1 min showing some stability i the market forming this a.m.

 Strangely the Q's which where the strongest looking late Friday continue to build on that strength.

The SPY Friday divergence of about an hour and only on a 2 min chart was clearly run over this morning, the question is whether this is a real change in character (essentially the 'Every person for themselves" hedge fund mentality I've been talking about which makes this market very unpredictable) or whether they will try to build one more volatility attempt. It's pretty early for the market to hold these kinds of losses without intraday movement and retracements, the HFTs need that action to make money.

And to think, this week is just getting started, interesting week indeed.