Last night HSBC Flash PMI readings came out for China and were a bad miss and heading back toward contraction below 50, later in the early a.m. the core of Europe itself, Germany, missed on both PMI manufacturing and services, both in contraction below the 50 level. The German Composite PMI came in at 48.8, a 6 month low and well in to contraction.Eurozone Manufacturing PMI dropped 3/10ths of a point to 46.5, making this the 15th month in a row of worsening European Services and Manufacturing PMI, leading many to believe the ECB will cut benchmark rates next month.
You may recall last night I said the Euro looked like it was going to see some short term weakness soon, well that's the reason why, however it seems after the Euro decline this morning a positive divergence is already building in.
Remember the negative divergence in the Euro last night? There's the decline, a positive divergence is building now.
Likewise I said the $USD was set to see some market negative short term strength, that also came to pass overnight and now seems to be getting to resolve to a more market supportive move to the downside as a negative divergence builds.
$USD bounces overnight and now a negative divergence starting that should be near term market supportive.
As for ES...
Last night ES dropped from the 4 p.m. closing level of 1557.75 more than 7 points, than on a small positive divergence around 4:30 a.m. ran to the high of the week, in pre-market there's a negative 3C tone building in. I suppose we may see some weakness until the Euro and Dollar reverse on the divergences each have started.
NQ also dropped overnight in to a positive divergence around the same time sending it higher, but with another negative divergence building in pre-market.
Gold has several positive divergences building this morning after backing off yesterday's highs overnight.
Perhaps this is because Goldman Sachs formerly closed their Gold short recommendation the day after Gold put up one its best 1-day performance in 3 months and best weekly performance in 18 months, gotta love those Goldman calls! They aren't that dumb by the way, they were buying everything retail was selling
We're on track, getting good signals well before events, we need to just stay on track, take action when appropriate and be patient when appropriate.
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