Midnight Peak

I had dinner tonight with a friend from Italy, she's a US citizen, but has spent 34 of her 40 or so years in Italy with a stint in India and Thailand. She had been recently thinking about returning to Italy, she went back for several months and couldn't find enough work to make ends meet. She told me on average most people make around $1200 Euros a month, a small apartment in any of the major cities runs around $750 Euros and gas is about $8 USD a gallon.

With the recent event in Cyprus and having talked to family, she's now terrified to move back to Italy. Ironically, even without  government, it isn't Italy she's worried about, it's the European Union and what they did in Cyprus as well as what they tried to do, she has no faith whatsoever that her money would be safe, she wonders what else they are capable of as she described what I would call a situation in which Eurocrats are increasingly unpredictable. In any case she makes a good living here and the 50/50 chance of returning to Italy the last time I talked with her about 3 months ago has turned in to an almost certainty she'll just wait it out here in the U.S., but she's very concerned for her family.

I have said on many occasions that Europe is essentially at war, not quite in those words, but I made many analogies and comments that essentially said Euros and bailouts were the new bullets, instead of Italy being invaded, the Troika installed a Goldmanite puppet named Monti, When G-Pap was taken out of power in Greece another Goldmanite took his place, the ECB is run by a Goldmanite, the war is difficult to describe or understand, but it seems to be the banks that are running it and they can topple a leader faster than we took down Hussein, all that's needed is a little economic trouble and a bailout and the country loss just about all sovereignty.

I saw tonight the comment of a Cypriot who worked at the Ban of Cyprus for 30 years, they were as follows...

"That will be the end. Our jobs, our rights, our welfare funds will be lost and Cyprus will be destroyed."

Depositors in Cyprus' second largest bank, Popular Bank who are over the $100k threshold may lose up to 80% of their savings, but this changes daily and it could well be 100%, it's also probable they won't see what's left for 7 years! The Russians were smart and used last week's chaos to get funds out as the brilliantly moronic Eurocrats forgot to deal with the Cypriot banks foreign branches, leaving a gaping loophole for the Russians to recover their money, so who pays now-Cyprus' small businesses and anyone able to save more than $100k Eur., the economy that never really was (beyond banking) has lost all of its Russian customer base who travelled there and now the businesses are so impaired they have no chance of survival.

When you hear BlackRock is moving out of European assets, you know that no one in the EU can be trusted a they grow increasingly desperate and unpredictable as they make and break the rules as they go.

As for the market, overall market volume today is increasingly lighter, even on up days, especially on up days as the market is sending you a message, price moves up and volume down, what's the message?

Last night I told you of the Dominant Price/Volume Relationship and that it represents a short term oversold condition which we usually see the following day close higher, that was the case so volume is still very much relevant even a it seems it is not, you just have to look at it in a way in which the crowd doesn't. Today's dominant P/V relationship was the most bearish, Close Up/Volume Down, the exact opposite of yesterday's and typical of a very thin market running out of buyers. This relationship was in 3 of the 4 majors, the R2K being the exception as it had no dominant relationship.

The VIX ran up 49% since our last buy signal from my custom DeMark inspired indicator (Can we just name this thing already?), now I notice something else developing...

The Bollinger Bands on the daily chart are starting to pinch again, last time they did the VIX made that run.

I also noticed an odd pattern in the EUR/USD, it first looked chaotic, and now looks to have settled its minor moment of indecision with what looks to be some losses to the downside tonight.

EUR/USD

Perhaps this is the reason for the negative 3C divergence in futures tonight, both ES and NQ.

 NASDAQ 100 futures and a 5 min chart with a leading negative divergence, remember it was the 5 min chart that made us nearly 50% in 1 day today on a positive divergence in ES.

 The ES 1 min wouldn't usually catch my attention overnight, but given the length of the trend, the EUR/USD and the 5 min chart as well as the European open only a few hours away, I take this more seriously.

And the ES 5 min chart leading negative. I feel good we sold the SPY calls bought Monday.

Even though the SPY's 3C chart closed pretty well, I will be very curious to see what this chart looks like tomorrow, perhaps we see a quick move above the SPX new highs and the bottom fall out?

CONTEXT isn't the best overnight as any markets are closed that figure in the calculations for the model, but even so, it also doesn't look good...

Perhaps tomorrow we'll have an opportunity to cash i on some of the April Puts and establish some new positions, even in this dead-chop market, there's seemingly always an opportunity if you are patient.

I'll see you soon.