"As of right now the only thing I see that looks a little suspicious is the EUR/USD, it looks like a negative intraday divergence is forming there, I'll keep an eye on it, but that would cause some downward pressure on the market."
The economic data was not good, but it is the move in the EUR/USD which was showing some signs of trouble before the data came out (perhaps a leak?) that moved the market, the Euro lower, but more specifically the other side of the equation, the $USD higher was exactly what put downside pressure on the market as warned above this morning around 9:45, 15 minutes before either report was out-except they were in the media's hands under embargo.
The Euro in red vs. the SPY in green, you can see the positive correlation as they move together, this is why I said the negative divergence could put downward pressure on the market....
However to be clear, the Euro is just a good proxy for the $USD, it is actually the $USD that puts pressure on the market, the market moves opposite the $USD, so here's the $USD this a.m.
A move up in the Dollar is a move down in the Euro and the market as well as commodities.
This is all just part and parcel of today's volatility, it's still very early and I'm sure we'll see a lot more volatility in both directions.
Right now I'm going to keep an eye on the Euro, the $USD, the market and some other assets to get a clue of where we are headed next, so far we're right on the money, "Volatile Thursday" and we haven't even reached th Fiscal Cliff nonsense yet.
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