However starting about 3 p.m. and intensifying in to 3:30, something looked to change in a hurry. I'll need to update and get some scans running, but one obvious red flag I see sticking out is the $AUD which tends to be a good leading indicator for the market.
Here's Sunday night's open of the $AUD/USD pair (part of a carry trade favorite that has been under pressure for over a month). The $AUD opened with a bit of a slide, but by 9:30 New York time (market open), as mentioned in a risk layout update, the $AUD looked supportive of an intraday (maybe longer) bounce to back and fill some of the gaps created from Friday's NFP miss. The green arrow represents about the time of the NY open to close.
Around 3 p.m. something changed in the $AUD, I'm not sure if there's some fundamental economic data out, but the decline started and became very sharp in to the close.
Take a look at what ES did over the last hour of trade...
ES crashed through its VWAP on heavy volume retracing a significant portion of today's intraday move.
I'll keep digging around and run some scans to see what's up here. It could be as I suspected earlier, today is a "Tofu" market day with little on the economic front and with Europe closed, there's no bad news coming out in the way of sovereign yields pushing toward 6%, especially in Spain. It my simply be market participants took what they thought they could get today and backed out in a hurry before the close.
I'm sure some more digging will turn up something. All in all, I'm pretty happy with USO's close. While USO may or may not break with the $USD correlation, we've seen accumulation cycles set up before and they will run that cycle to completion even if it breaks with the $USD correlation, although that typically doesn't last too long.
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