A.M. Observations

As I covered in the daily wrap last night, there are two themes this week, one of which is a little less than a day and a half of accumulation, actually most of Tuesday and an hour or so at the end of Wednesday, maybe close to two. Following the simple concept that these things don't show up out of the clear blue unless there's a concerted effort , I've been thinking what the reason for this is; I think with the charts we post here every day we can easily debunk and turn even the writer of Random Walk Theory. My final assessment was the same one I had earlier in the week, the psychological magnets of Dow 16k, SPX 1800 and NASDAQ Comp 4k - all of which are EASILY in reach, although I'm not sure how that plays out on op-ex. From what I understand max pain based on both open contracts and Dollar Vale (Thanks T. :) is $178.50 so the pin is just above, 1800 or 180 would work fine.

As for the mechanism, it's still the Yen based carry trades overnight as the BOJ has had several officials including the high chairman himself jawboing the Yen lower by saying it is not too low, it's not bubbly, it can drop further and it's fine, etc. That helps move the Yen lower, at least it wasn't outright manipulation like yesterday.

In Europe the German IFO Business (Confidence) Survey came in stronger than expected which helps the Euro so when you have a stronger Euro and weaker Yen you get a stronger carry pair of EUR/JPY, however there may be a problem with that, take a look.

 a 5 min chart of the single currency Yen Futures, notice anything? The downside momentum that has been lifting the EUR/JPY and thus Index futures looks to be slowing to a lateral trend, throw 3C in the mix and you get...

 A negative divergence sending the Yen lower at the left and a positive divegrence slowing the Yen down right now pre-market, possibly even lifting it, I'll keep an eye on it.

There are other means of manipulation, HYG, hammering the VIX, etc , but this has been the most effective, even more so than F_E_D speakers including Bernie and Yellen this week.

 This is the 5 min chart of EUR/JPY (candlesticks) vs ES (purple), you can see there's some trouble and disconnects.

The same is true for the USD/JPY.

Even though a.m. trade is highly manipulated and this is why pros trade the close, this is ES 1 min in to the open.

It looks like the Yen based carry trades are falling off, we'll have to see if something else fills the gap, but it looks like SPY +178.50 is the general op-ex target today which fits with the psych levels.