Fail

As predicted just 30 minutes or so ago, the Euro's negative divergence would likely send it lower with another break out of the psychologically important $1.30 level rejected, I wonder if it might be because Art Cashin caught the notorious leader of the Euro-Zone, Jean-Claude Junker ( who once said, "When things get serious, you must lie" ) in his latest faux-paux...

The Prime Minister of Luxembourg-J-C.J recently was caught talking about fixing the Euro-zone saying, "We all know what to do, we just don't know how to get re-elected after we have done it"

Perhaps it's that mentality that sent the Euro lower as the truth came out, the ruling class keeping their positions is far more important than millions of people out of work and losing everything they have. Brave jean-Claude, may you follow that other notorious Jean-Claude down the path of irrelevance.

 The EUR/USD with the earlier 1 min overnight positive divergence between that $750mn purchase of ES and the open of Europe, as well as the negative divergence not confirming higher highs in the pair, the break above $1.30 and an epic fail.

Much of the strange activity of the last 2 days looks a lot like stop hunting, whether the pre-market huge order yesterday in gold futures that stuck out like a soar thumb and sent GLD plummeting yesterday to a -1.28% loss after having been down significantly more in the a.m. (it's now moving higher), the action in the market yesterday that would have wiped out all stops short and long within the area, the overnight $750 mn order in ES which defies all logic, several large option orders in very illiquid markets that stand out along the magnitude of a 1 day (actually 1 order) 10,000 put contract when the open interest was around 1,000 total, who places orders like that? The High Yield HYG selling off so badly that the volume in 1 minute was half of the average daily volume at the close yesterday, similar in Junk Credit. There are a lot of shenanigans, I'll re-double my efforts to find the real story, the highest probabilities, but I stick with the highest probabilities, not with emotional decisions based on strange market behavior that seems to be obviously there to force emotional reactions.

 5 min EUR/USD this morning after the break of $1.30

And this week, note how sharp the decline was off $1.30 this morning.

I don't like looking at leading indicators this early, the close is the most informative, like yesterday you might think HY Corp. Credit was acting bullishly, but if you missed the last minute of the day, you missed a lot of information, however it is always worth looking.

Thus far HY Corp. Credit is decoupling with the SPX, it is acting a bit more bearish than the market, High Yield Junk Credit is doing the same (HY Credit is used when they expect the market to go up, Investment Grade is used as a flight to safety on market declines). The leading FCT is also off and dislocated from the SPX intraday this morning.

Of course my favorite currency for leading indications because of its use as a carry trade currency and because of its representation of Asia, the $AUD is also way off this morning as seen earlier, this is a great leading indicator.

The Euro was already disconnecting yesterday from the SPX, intraday it had decent confirmation until the afternoon, but it lost the momentum the SPX was showing, of course the SPX has to make it to a stop level before the close. This morning there's some dislocation intraday as the Euro failed at $1.30

Yesterday and today (1 min chart)

Yields are not confirming the SPX either. High Yield Credit is divergent negatively intraday and on a larger divergence which is along the lines of a decent move down, over a 5+ day period.

Within the last 40 minutes Commodities have also separated from the SPX and are moving to the downside.

The point is, overall, right now the risk assets that should be rallying with the SPX if there is a true risk on sentiment, are not.