After having gone through the futures (both currency and Equity) I'm not bragging at all when I say this, in fact I'm telling you something quite different and quite interesting, for the 3rd time in 24 hours in a situation I don't think I've seen in years, I was correct again.
In last night's last update, Futures, I concluded with this...
"ES, NQ and TF are all in bounces, but all have negative divergences. So again for the third time in 24 hours, we have a market that seems like there's something not right, the first two I felt that way about I was correct, this one is even more fractured than the other two. One possible reason for this fracturing is different agendas, some closing carry pairs, some playing oversold bounces, some trying to play correlations that may no longer exist, in other words, The market is splitting which is where it gets very dangerous on the downside."
The Yen which looked like a VERY strong bounce candidate just broke even lower, this does make sense from a loss and margin point of view, but the decline now is on the order of "Ridiculous". It seems whatever positions are started by one group of traders are immediately sold as soon as there's the slightest strength by another group of traders, as I said last night and the thing that would be most dangerous for this market in the position it is in, is the "Fractured, splitting of the herd" and that's EXACTLY what this looks like, I even said last night the market looked more fractured then ever, in fact more RANDOM than ever as I said above, "One possible reason for this fracturing is different agendas, some closing carry pairs, some playing oversold bounces, some trying to play correlations that may no longer exist, in other words, The market is splitting which is where it gets very dangerous on the downside."
Not only did the Yen not bounce, the Euro started to recover and as soon as it got some strength under its belt, it too was aggressively sold overnight, the same pattern of two nights ago and yesterday afternoon, all 3 times I've warned hours in advance that these do not look right and last night's looked the worst.
The AUD looked like it would bounce from 3C, it went on to start to bounce and as soon as there was some strength, it too was aggressively sold.
The $USD which looks overbought, but remember I have been saying it's coming out of a downside month_ correction and starting to head back up off a major "W" base, also looked as if it should correct to the down side overnight, it shot even higher.
I said the EUR/USD looked to head higher, it did move higher last night, guess what happened? That little bit of strength again was immediately sold in to. Both Carry pairs, EUR/JPY and USD /JPY looked to head lower, they didn't, they moved quite a bit higher, in the case of the EUR/JPY, that's even with the Euro losing ground, it's just the Yen lost even more.
The other pair, AUD/JPY that looked to loose ground, did.
As for the Market Index Futures, I said last night, "ES, NQ and TF are all in bounces, but all have negative divergences.", they all headed lower except TF, but I think they had no choice, if it wasn't selling of strength it was risk currency correlations getting smashed every time they got an insignificant gain under their belt, AAPL 's decline started the same way too.
Another issue exacerbating all of this is the Currency Crisis I wrote about over a month ago, as predicted in response to Japan, last night alone.... Sri Lanka cut its reverse repo and repurchase rate to 9% and 7% respectively, promptly followed by Vietnam cutting its own refinancing rate from 8% to 7%, then moving to Thailand where the finance chief Kittiratt called for a rate cut exceeding 25 bps, and more jawboning from South Korea suggesting even more rate cuts from the export-driven country are set to come as it loses trade competitiveness to Japan.
I also said the more other countries debase their currencies, the more the $USD will be bought, take a look at the $USD overnight in the face of all this monetary stimuli...
As far as futures now ES and NQ are in line, TF has a slight positive divergence, but again, this is something I'd say is a red flag, it doesn't look right, either risk is on or not, it's not fractured.
I'll keep telling you when I see something that doesn't look right because it's extremely rare, but right now, it's all I see.
Next update after the open...
Have a great day.
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