A.M. Observations

Good morning,

All I can say is I knew I'd regret it last night if I didn't post what I saw and this morning it was pretty much spot on for short term trade probabilities and for the change of market character (longer term probabilities).

Just about the time I wrote that I thought Index futures were bottoming last night partly because a negative divegrence I saw in the Yen, meaning the EUR/JPY moves higher, it was the bottom.

 This is the 5 min negative divergence in the Yen, a lower Yen is typically a higher EUR/JPY which is typically a higher market.

However seen above on a 5 min chart, ES (purple) is not tracking EUR/JPY worth a ...nickel? This is another change in character that really means something, something NOT GOOD for the market and those trying to ramp it on a whim.

 intraday on the 1 min you can see ES is following the movements now that the Yen got knocked down, but still a major problem.

At 8:30 we have a little spike in Index futures from Initial Claims which apparently had some trouble being "seasonally adjusted", thus creating the biggest spike since 2005 excluding Sandy and the worst print since March at 368 on consensus of 320, this is also good for the market very short term as I suspected last night we'd see..

The $USD gained a bit on the Claims data, treasuries knee jerked down and up and gold didn't do much.

 This is the 5 min chart of ES, the white box is the lows I mentioned last night when writing the Daily Wrap and my opinion that we were seeing a bottom (short term) out in. Note the positive 3C divegrence, I only care about these on 5 min charts and higher for Index futures and all of the major Index futures have it, so we should get an upside bounce which is fine, I'd actually like to trade it, but we'll get to that.

Remember the pullback in gold, I got my target in GDX so it was plan your trade and trade your plan, otherwise this morning that DUST position should see some more upside, but I don't think that will last for long, we'll be looking for a NUGT long entry to get back in to.

As far as oil, I thought we'd get a pullback, the correct word is "correction" because a correction can be either through time as seen above or through price which is a pullback, but both have the same effect of wringing out the dead leaves.

We'll be watching USO for a position as well.

Now, understand that I may be closing some bearish/shorts in the TRADING PORTFOLIO to ride the market, don't assume this means I'm now bullish on the market, I'm bullish on a bounce that I think can be traded, but that's about it, it has NOTHING to do with any other analysis or any other longer term or core short positions.

So lets see where the opportunities are.