How About Carry? USD/JPY

I'll put together a Daily Wrap for you so you can see the different assets that matter, how they fit, where some opportunities may be (for instance short term hitch-hiker positions may work well in Financials) and there's something that I think may have turned some heads momentarily, but I think beyond the immediate and face-value  news  this event really sunk in.

As far as the market goes, our big picture, the fact that we have been dead-right-on regarding the F_E_D's intensions ever since QE3 was first declared on September 13th, from the way they "slow boiled the frog, looked for a new yard stick that would allow them to use data that is highly subjective and easy to manipulate to determine F_E_D policy and the numerous face-saving measures they have put in place. As of September 13th I thought the F_E_D had for the first time since 2008, made a radical departure from their normal disclaimer, "We have more policy tools that can be deployed if the economy needs it" to a much more sanguine and almost apathetic tone. Then we were 100% correct when we said the F_E_D was looking to change the yard stick by which they measure policy accommodation from something that is objective and clear to something subjective and able to be changed or manipulated on a whim. We were probably among the first to say, "The F_E_D is looking for an exit" and this at the same time they just introduced QE3, who would have thought of something like that at that time? (The answer is, anyone who listened to what Bernie and the F_E_D said rather than what people wanted to hear or what conventional wisdom has been historically). And now the last pieces are being put in place, "The chairman's legacy" so these are face-saving additions.



 I think when looking back on TODAY'S NEWS we will find that the analysis coming regarding what was said today, will be looked back on and we will have been correct again... But I'll get to that later...

For now, one obvious place to look for some short term market guidance other than HYG and other Arbitrage assets, is clearly the Carry Currencies or what is left of them so in that light, here's the USD/JPY and analysis. This is pretty simple, it only takes 3 charts.

 The 1 min USD/JPY which helps the market when it moves up and hurts the market when it moves down generally speaking.

This is the 15 min Yen because the individual currencies are easier to analyze to predict the pair...

The negative divergence in the Yen simply turned it from up to lateral, during the lateral period (smart money doesn't chase anything up) we see a positive divergence currently.

The same has happened, but the exact opposite as it should be in the 15 min $USDX chart, the positive divergence halted the downtrend.

However we have a leading negative in place currently.

Take the Yen's positive and the USD's negative and you get the USD/JPY losing ground in the near futures, this is a headwind on the market so it would seem this fits with out analysis late last week that the market will pullback before making any run higher which is the more important move (between a pullback and a bounce).

The most important move of course is the longer term or rather "Big picture" which is clearly negative.

More to come