Coffee and Market Manipulation

This morning I think I'm grateful for both. The first for obvious reasons, the second because if we were to have thousands of funds all doing their own thing he market would be much less volatile, it wouldn't move as much as it does and it wouldn't be clearly visible in underlying trade, but because all of these funds follow each other like sheep, all buy and sell the same things at the same time and all scheme in the same direction, it creates underlying trade that has a theme and can be followed rather than thousands of individual voices, we have one large singular voice, that's why divergences become strong and clear and reliable.

The Non-Farm Payrolls just came and went, it wasn't too hot or too cold, it was 155k jobs added with consensus of 152k; anyone remember yesterday's ADP at 215k? Like I said yesterday, I don't know why anyone even publishes their garbage.  The unemployment rate popped up a bit from an expected 7.7 to 7.8%.

So for the second time in as many days, ES drifted lower overnight, only a few points from the 4 pm close, but about 10 points from the afternoon highs and once again ES is popped back up toward the afternoon levels around 1457 (high around 1460). So it looks like that 1 min positive divergence late yesterday that I thought would show us early strength is likely going to be in effect which means we may have a fade of that, or it may wait until next week, we'll monitor it.

The fact is a print at consensus or just above is not going to help those who are hoping the F_E_D is not really going to back away from QE and policy accommodation like yesterday's minutes hinted at. Remember how many times I have quoted Kevin Warsh (Ex-F_E_D governor) when he said "Exiting policy accommodation is the really hard part", well less than 24 hours after the minutes were released investors are already afraid their might be a devastating 1994-like surprise F_E_D hike in rates-at least that's CITI's take.

As for the futures ramp up to the hovering level of the last 2 days, here it is in all it's manipulated glory.

 ES spike on the NFP...

5 min (longer chart) showing the afternoon highs and ES overnight with a 5 min positive divergence.

Futures still haven't gone negative (3C) on the 5 and 15 min timeframes.


And the EUR/USD...

 Still devastatingly low and totally out of sync with the market.

There was a bit of a pop on the NFP data, but not enough to move the pair anywhere near a reasonable correlation with the market.

At the NFP (8:30) I also checked a few carry trade currency pairs and they were slipping, it is just an initial move so I don't want to make too much of it, but if the NFP doesn't help the QE situation, then the theme is going to be risk off and the carry trade is the first place you'll see that, they dipped right at the NFP release this morning so perhaps funds are scrambling to close their carry trades and reduce exposure.

We'll have our answers on how to play this soon enough. We haven't done much the last couple of days because the market has been range bound and we don't want risk with no probabilities, but yesterday the probabilities started building, so perhaps today we'll be busier with positions.