A.M. Observations

A quick look at futures and its clear that JPY carry crosses didn't lift higher overnight as per the norm, often (but less and less so) cattying futures with them.

There was some bad economic news on just about every continent overnight, but the one that stands out is a former BOJ member and current Head of Rates and Currency Research for Japan says the soaring USD/JPY days are done, the BOJ can't loosen enough next year to recreate the rise seen this year, also that USD/JPY should head back to $100 and the JPY itself will likely not be in free-fall anymore either.

EUR/JPY vs ES (purple) overnight (yellow)

This didn't seem to help the JPY crosses, however somewhat strangely...

A closer view seems to show ES leading the EUR/JPY.

In any case, as you know from Friday's wrap, I feel something strange was set up 3-4 days in advance of Friday, leaving HYG credit looking like this in to a gap up.

HYG selling off Friday on a gap, can't wait to see what it does today.


I think with Friday's close, for any truly meaningful bearish candle we needed to start with a gap up this morning (Evening Star Reversal, Hanging Man, Bearish Engulfing, Dark Cloud Cover, etc-all require a gap up), some of those would be absolutely destructive on the close today after Friday.

Also weighing heavy on my mind is the Dominant P/V relationship Friday, the most bearish and one that typically sees a red day the next trading day.

It could be a very interesting close after Friday's candle.