In any case, after all of the positive news last night and the positive divergences in MOST PLACES, the divergences still failed, the price ramp still failed and 3C was where it should have been as they failed through the night.
This morning I get the exact same feel as last night, there's displacement everywhere, fractures when there should be solid confirmation, we already saw it in Index futures.
That's not the only strange event, something isn't right, some of you noticed it, CONTEXT.
The most obvious failure was the $AUD itself...
This is what the AUD and many risk on currencies looked like before all the futures movement as well as Equity Indices.
After seeing everything that happened and considering the way something felt drastically off as I said last night; I wouldn't disagree with objective, solid signals (but they weren't solid as mentioned, there were red flags, small, but there), one may be forgiven if after looking at everything that happened, to suspect futures were accumulating overnight on some data leak, essentially buying the rumor and selling the news. Of course that can't be proven, but that's exactly what it looks like and I probably wouldn't have mentioned it if I didn't feel something was wrong last night.
This was posted right after I posted, "Something is moving futures all around" at 9:33 p.m. EDT, the very next post, "Futures Update" at 9:53 p.m. EDT, I said...
"The only news I can dig up is that FOREX traders are embracing riskier currencies and selling the Dollar, but looking at the charts, something doesn't look right, it's not consistent yet through single currency futures and the pairs, but for example, the Euro which moved up, has a worsening negative 3C tone, the Dollar should look worse, but almost looks as if it's about to transition to a more positive stance. R2K Futures have a negative divergence and couldn't make a new high.
This has the look of a rumor knee jerk, if I find out any more or if signals start becoming more consistent as this is very new, I'll post the update ASAP."
As you'll see, the $USD did in fact head higher through the overnight session, the Euro gave up the gains and went lower and the Russell 2000 futures that were not performing with ES and NQ and had the only 3C chart of the 3 that looked correct, especially given price, did in fact head lower after failing to make a new high, as did ES and NQ when a cursory look at their charts suggested they and the risk on currencies keep running higher. Instead, as already suggested, it looked like there was some inside information in one of the night's releases (China, Australia or South Korea) that the risk assets prepared for (as 3C shows) and even CONTEXT saw a sudden correction as it if were manually added rather than a natural progression (has anyone seen the CONTEXT model for ES ever make any kind of similar transition so quickly considering how many assets would have to change all at once in diversified fields from FX Carry Trades, to Credit, Sovereign Yields, etc? This was no small adjustment, from negative 10 Es points to positive 2, a 12 point move almost instantly-this would normally take at least 5 hours to transition). Lets look at what happened after the 3C positive divergence going in to the futures jump as the AUD is one of the most extreme examples...
In any case, the $AUD shot up on their positive jobs data (take a look at Greece's today-pretty ugly-youth unemployment now at 64.2% and general UE at all time new highs) and on the pre-release positive divergence and then hit a brick wall and sold off the rest of the night with 3C confirmation. Does this not look like inside information, buy the rumor, sell the news?
In any case, whatever it was, my gut feeling or observation that something was just off, was proven correct through the night in every asset class effected.
The $USDX's 5 min chart reads a bit differently doesn't it, a lot more in line with the Dollar's actions, as you know the longer term trend is always the one to be given more weight.
Here's the negative divergence last night from 5 p.m. to 9 p.m. EDT I spoke of above in the AUD/JPY, this is one that caught my eye.
Although all of this may be disturbing and confusing, this is the volatility I was warning of, as I made clear, not just volatility in one direction, but in every direction and not just in price, but in the market's unpredictability-I used AAPL's very fast, sudden and deep demise as an example because it was at the same stage this market is at just before it shed 45% of value in 7 months.
The reason the market grows more unpredictable at this stage is the same reason as AAPL's (in general), AAPL looked like it was going to make one more bounce before a grand failure, then Dan Loeb's Third Point LLC Fund (one all the hedge fund sheep follow) showed AAPL as a top 5 holding one month and it disappeared the next, all of the sudden EVERYONE became a seller and because all the hedgies were trying to squeeze out of one small exit door at the same time, AAPL lost over 300 points and 45% almost without a single break in the selling, that's the unpredictability at this point as everyone has their finger on the trigger and once a big fund decides, "He who sells first, sells best", then it's on.
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