Pre Market Futures

It looks like the Carry's have gone crazy, USD/JPY and the AUD & EUR vs. JPY crosses as well have all been on a tear since Tuesday's lows of the week... The story is of course that Obama is willing to negotiate and has a meeting set with Republicans this morning. In any case, those 5 and 15 min positive divergences building in the carry crosses and Index futures all week finally have a headline that  is kicking them in to second gear...

USD/JPY 5 min showing the week's lows on Tuesday roughly 5:45 p.m. to present.

There's some question in my view whether this will hold without a decent correction...

1 min USD/JPY looks like it wants to correct.

ES is up about 17 points as of right now 7:15 a.m. which is ironically just about in line with the Capital CONTEXT's model which was between the high teens and low 20's, that's based on things like Credit outperforming ES/SPX futures as well as Carry trades, and other institutional assets.

I seem to remember a Goldman recommendation I believe Monday to short the USD/JPY, remember I never claimed they were dumb, I claimed they were trying to buy USD/JPY and reminded everyone that Goldman isn't in the business of giving out free advice so whatever they rec'd, do the opposite as this makes something like the last 8 rec'd failures as this particular one is set to stop out any moment now.

The short term Debt Ceiling increase that's being discussed (4-6 weeks) seems doable, but it will be attached to framework for a longer negotiation and I believe the Democrats in the Senate said they won't accept framework that puts Obamacare on the discussion list so this small step still has to span a very wide gap, I'd just say beware of volatility.

As far as other assets...Those 5 and 15 min positive divergences that have been growing in Index futures look pretty good, the NASDAQ which looked the worst of all now looks like this...

NASDAQ 100 futures (NQ) looks to have strongly accumulated the lows yesterday which was a theme seen broadly across the market.

However looking at the intraday 1 min overnight, it too looks set for at least some correction.

NQ 1 min

Although the R2K and ES 15 min futures look great and look like any correction will be short lived...

TF 15 min also very strong...

Both ES and TF 1 min charts also look set to correct soon.

Also on the correction bandwagon, 10 and 30 year Treasury futures which been heading down all night look set to correct to the upside with positive divergences building in.

Crude looks like a bear flag, it has made up ground overnight, but I suspect it at least corrects a bit before moving higher, again it needs a bigger base/footprint for any sustainable upside run, but the news that I talked with some of you about is that crude went up with the USD overnight so long as the USD went up as part of a carry trade which it did.

Gold and silver didn't get hit as hard as I would have thought, in fact silver is a little bit, "all over the place".

So we have an interesting start to the day, but regular hours are really what I'm most interested in.

ES 15 min chart leading positive which is good for the near term outlook, but price does not need much of a correction to widen that base or footprint which would be best in my view for a more sustainable upside bounce as we have been looking for to set up some final shorts.


I have an 8:15 Dr. appointment, it's a short one, but he always seems to run late, in any case I should still be back before the open.

I might look at taking some profits on call options if there's strong early momentum, watch the TICK for signs of the momentum fading or RSI or even ROC applied to price. We can always re-enter calls at a lower price if the market looks set to correct.

See you soon...