Pre-Market

BOOM!

Or Good Morning, but if you were long gold, it's BOOM! Last night gold and silver were selling off again, there's obviously something or several things behind this.

Overnight China had their GDP, Retail Sales and Industrial Production all come in below consensus (MISSED) and gold sold off, BUT this in itself wasn't the reason as the PMs were selling off BEFORE the Chinese data came out.

It seems Japan and the HUGE JGB (bond) market that is being crushed with limit down circuit breaker halts to JGB futures on the Tokyo Exchange not at all uncommon and all because of the BOJ's Buzz LightYear QE policy, "To Infinity and Beyooooonnnndddd!!!!", it seems as I speculated (regarding Friday's action) that gold is one asset with a fairly large market and a lot of profits, that is being sold to meet JGB margin calls (whether they have received them or know they will in days as JGBs continue to get crushed).

It's obvious from trade that "Stop-Fishing" expeditions were also in play...

However this was not the case of PM selling (Gold futures 5 min chart above), it just exacerbated it.

However as mentioned last night, we may have a chance to ride the Bucking Bronco known as gold/GLD so long as the divergences that are in gold futures continue to hold up and show up in GLD, the we have a high probability trade that few will probably be interested in until they start chasing it as it goes parabolic (still very speculative-we need GREAT 3C signals).


 Gold futures

15 min

 5 min

1 min-All held the positive divergence overnight so we can likely get accumulation in the paper market (ETFs like GLD). The 1 min has a positive divergence at the lows and a slightly negative now so it looks like intraday gold will pullback, perhaps allowing GLD to accumulate and all of the stop hunting sounds like accumulation too (because there's big volume created when hitting stops  which provides supply or liquidity that large buyers need to accumulate and they get it at a better price that is of course averaged). I know this seems like the last asset you want to but, but "when there's blood in the streets, that's the time to buy!" except I'd add in, you need an edge like 3C positive divergences to confirm.

Currencies- These actually confirm the signals and the initial theory/game plan...

 EUR/USD since opening this week has become market supportive from market negative

 Same with EUR/JPY

And USD.JPY

Now I still think initially we sell off which gives the ETFs a chance to accumulate...

 USD/JPY 5 min is showing a positive divergence, the 1 min is not, that means to me, early selling that is being accumulated for a market supportive move higher later in the morning or afternoon perhaps.

 $USDX 1 min positive which is initially market negative early on...

$USDX 5 min though is slightly market positive so the early market negative trade allows ETFs to accumulate on initial selling, the slightly longer signals allow a market supportive move up.

Index futres show the same.

 ES 1 min nothing here

 NQ 1 min showing some early accumulation, but still small

TF 1 min intraday should see negative action, 

But go out slightly longer...

 ES 5 min positive

 NQ 15 min positive

 TF 15 min positive

This means, take some profits on shorts/Puts in early selling, at some point we can ride the bounce long and then ...

ES 60 min VERY negative, we want to sell in to price strength or short.

Sell in to price strength for what should be the big move.