Midnight Futures

I said in the Daily Wrap tonight that I had hoped to look at the futures later tonight and discover something about the market.

Near the end of the post when talking about Index futures, I also said ...

"There's a symmetrical triangle forming in ES and NQ and an ugly version of one in TF, this would normally be taken as a bearish consolidation/continuation pattern, I'm betting though it will do as they usually do and run a head fake move to the upside, the divergences are already there for it, what happens after is where it gets interesting."

I posted the entire article at 6:34, at 6:35 which was probably about 10 minutes after I had written the above, this is what happened in ES and the other Index futures (as they already had a 1 min intraday or overnight positive divegrence)...

 First there's an upside break from the triangle, the volume isn't huge, but there's a noticeable uptick and then there's a downside break, this is shaking out stops on both sides of a pattern or what we call a "Crazy Ivan" shakeout, then around 7:30 we get a pretty solid move up of about 14 ES points. I was listening to talk radio and recall there was a lot going on at the time in the House, votes scheduled and cancelled, etc and apparently "Enthusiasm" from Harry Reid. In any case prices are fading, having lost about 6 of those points thus far, but this is overnight trade and why I don't take 1 min charts too seriously overnight, there's just too much time, too many markets and too much that can happen.

Instead of getting any real information here, 3C is nearly perfectly in line with price which suggests the move was news driven in the thin liquidity of overnight futures.

The only interesting thing is the 15 min chart below of ES...

This chart is looking worse and worse, that would be coming from the 5 min chart, but I suspect what will be important come pre-market tomorrow will be the shape of the 5 min chart unless some massive 1 min divergence forms overnight. right now this doesn't mean much to me, it doesn't tell me anything, 3C isn't leading suggesting a lot of real money behind enthusiasm and it isn't leading negative suggesting a lot of heavy distribution , however with the thin overnight market, the 15 min chart may be the better judge of that.

The $AUD is close to in line at one min, it has a negative bias beyond that, the Euro is a bit moved, I'd say short term overnight it starting to see some weakness, the $USD still has a negative bias despite some upside movement. The Yen finally is inline on the 1 min and has definitive positive bias beyond 1 min charts, which could be trouble ahead if there's nothing else moving the market like bi-hourly Congressional leader cheerleading, especially because...

Strength in the Yen which I'm 80% convinced is coming will damage the carry cross like the Euro/JPY above in candlesticks, when you look at how ES (purple) has been hugging the pair both up and down the last 4-days (yesterday up, today down, tonight up), you understand why a falling EUR/JPY (like today during regular hours) is damaging to the broader market.

This is why I'm putting a lot of time in to looking at the currencies to see what the likelihood or probabilities are. For example, overnight the 1 min EUR/JPY...

 is close to in line, there was a positive divegrence at the same lows the market or rather ES and TF hit and developed positive divergence at this afternoon, there's a slight negative in the pair now.

To break that down further, for the pair to rise and help the market, the Euro must outperform the Yen, Euro up and Yen down, when you buy the EUR/JPY you are going long the Euro, short the Yen so I look especially close at single currency futures...

 This building positive in the Yen (30 min) is why I say I'm 80% positive it's heading up which is bad for the EUR/JPY and bad for the market as long as it follows it as it has been doing for the last week and really much longer. That's a strong Yen positive.

The Euro's negative already happened, there's not a LOT to get off this chart, but I can say I'd give the Yen much better chances at outperforming the Euro, that tells us something about the market when we have signals like tonight in Index futures, neutral.