FX

There's a lot to talk about today:  individual stocks like AAPL and some interesting short term behavior,  a possible war between  Ackman/Tilson and Loeb over HLF (Short vs. Long)- aren't you glad we waited for a solid signal and didn't get caught up in that mess?

There's market behavior that is part of a reversal of the Trend #1 we hit on the head, a strong move to the upside (one that we may not even be able to imagine) that took the IWM to new all time highs.

A Big drop in the $USD and parabolic EUR/USD trade today.

Possible F_E_D POMO influence in the market (POSSIBLE!)

Which assets are looking the best right now and whatever spring cleaning might need to be done, like the AAPL calls.

More importantly, today's action, just like Friday, the level we were looking for was hit so late in the day that no one is fast enough to look at all the assets and correlations that need to be seen to tell where we are at, but we are in the zone now that I've been looking for and my next trend (bigger Picture) is trend 2, a stronger, longer move to the downside.

Apparently we also had Demark call a top, I'll have to look at my custom "Demark-based" indicator.

I can't get to all of this tonight, it's just too much, but I'll get to the important stuff. One of the first things is the biggest drop in the $USD in 4 months. The EUR/USD pair traded in parabolic fashion which is supportive of almost all risk assets, I know for sure some didn't play along, but the question is how long can this parabolic move hold. You know how I feel about parabolic moves, they are not to be trusted.

So right to it...

 This is the EUR/USD pair since FX trade opened this week, to the right of course is our parabolic rally in the EUR/USD.

 A closer look shows a loss of momentum as the Rate of Change slips, this "may" be that little "U" shape that is followed by a nearly vertical drop, this is how most parabolic moves end.

 As for the 3C signal in the $USD,  you can see through December it was largely confirmation (trading with price), then a leading negative divergence in early January around the 4th and a larger relative negative divergence yesterday. Today we have the start of a positive divergence, in fact it's even leading a little.

 On the other side of that coin, the Euro/FXE with several negative divergences on the way down , a large relative positive divergence that really took off the last 2 days and the gap up today with a small negative divergence.

Usually these ETF's of the currencies (somehow no matter what the overnight trade is) manage to pick up almost exactly where they left off, so there may be a lot of volatility i the EUR/USD tonight on the downside and upside.

Either way, it doesn't look like a sustainable move, at least that parabolic portion would have to be dealt with and it fits our trend expectations as it gave the market that extra support it needed to break the level we have been predicting since Sunday night.

If the EUR/USD falls, the $USD rises and that's broadly bad for risk assets whether commodities or stocks.

 Here's a closer look at the Euro/FXE and the 5 min leading positive yesterday and a smaller leading negative today.

 This 1 min ES (S&P Futures) chart shows the entire day and the overnight action including the European open. The divergence I'm most focussed on right now is the start of a leading negative divergence during the last hour to present.

NASDA Futures are showing the same. This may be based on trade in the EUR/USD, quite often divergences in FX end up bleeding in to equities. 

I'll be updating you on other developments, I have a lot of charts and indicators as well as internals to look at. However you may want to watch the Futures as well as the EUR/USD, that could lead to some excitement.