Pre-Market

Last night we had a 1 min negative divergence in ES (S&P Futures) for about 6 hours, this while last week I posted the 5, 15, 30, 60 min ES charts all with never seen before positive divergences, making me feel comfortable with taking on more long exposure Friday.

Last night's divergence as is seen on the 1 min timeframe, can cause a pullback or lateral consolidation, either way it's called a consolidation, it's an intraday chart and generally not an important signal to the bigger picture. This divergence last 6 hours and about an hour and a half after I posted this at 11:30 last night the divergence not only ended, but ES started moving up again after it had only really pulled back  about 4 points total.

Furthermore, last week I mentioned the $USD will be very important for the market to get its footing to put in an upside reversal, I showed some signs of that happening last night and they carried on through the night, making last Friday's pop of the $USD above the nearly week long range look exactly like what I thought it was, a head fake move as they are usually the last thing we see before a reversal and in thi case for the market, a $USD downside reversal is important for the market to move up.

If you are looking for good news from the overnight session to explain this, it really isn't there, in fact there was some bad news coming out of Europe, but if we look at the charts and especially the second half of last week, we saw extreme upside momentum and the ES divergences that I've never seen before, something that looked a lot like final preparations seemed to be underway.

Of course the market always sees a dramatic move in momentum at the 9:30 open so we'll have to wait and see how that goes, the afternoon trade is always more important, but who knows what we'll see, as mentioned last night, to make the news and get consumers feeling good before Black Friday, the market would have to really impress to the upside and fast.

Right now we are set to open with a nice gap up which also makes a lot of sense after seeing the reversal daily price candles in averages, stocks and Credit, there were some big ones.

Here are the charts.

 ES starting the new week dipping and consolidating on last night's negative divergence.

 ES from the same point last night to the left, the European open at the green arrow and upside momentum since then despite bad news.

 The current 3C/ES chart...


 The EUR/USD since the start of trade for the week...

More importantly on a 5 hour chart, the range and had fake breakout in the US Dollar index and drop since then, this is what we needed to see.

There were hints everywhere, in fact they were pretty much screaming, as I said Friday, I feel very comfortable taking on a little extra long side risk.

Here's one of many of the daily closing candlestick reversal patterns, but this one is huge and in HY Credit...

If I had more time I'd link to all the examples from Wed-Fri. last week that were extreme momentum moves, they are available in the archives at the right side of the site.