Futures moving a little

Since the last check, we have some movement in futures, still not a lot, but some 3C signals are taking shape, while they are still young, they are moving in the expected direction. It appears from the FX charts that there's some strength starting to develop in the JPY futures, 3C seems to confirm this as well, the Yen rising is not good for the market, it's not good for the carry trade currecies that are largely traded in baskets for diversification, but they Yen figures in most of those pairs so before we look at the futures market indices, lets look at one possible driver of lower prices in the market...

 The 5 min Yen/JPY futures has a pretty decent size positive divergence, it has been flat since late Friday and this week's open, but now it's starting to move up in the direction of the divergence.

 As mentioned earlier, the EUR/USD is one of the many pairs that really looks unremarkable and pretty flat, but...

 The EUR/JPY is showing weakness in the Euro vs. the Yen, similar to what we see on the Yen futures chart above.

 The USD is also seeing some weakness vs the Yen after a pretty flat open.

The AUD has seen the most movement vs the Yen.

 This is the SPX futures 1 min which has a small positive, but this can move around a lot overnight.

 More importantly the 5 in chart is seeing a change in character, for the entire month of February we had been seeing a negative divergence like the one to the left in which we entered SPY, QQQ or IWM puts, but then we'd typically see a positive divergence and enter calls and then another negative and back and forth we went. This is the first time since we started trading the weekly options that there have been two consecutive negative divergences and this one is looking a bit worse than it appears at first, 3C made a lower low while price made a higher low, that makes this a larger negative divergence.

 The 1 min NQ/NASDAQ futures are pretty much in line

The 5 min though is seeing the same second consecutive negative divergence with a new leading negative 3C  low so far tonight.

The currencies have given us a lot of good clues, hints/signals among other assets and indicators and it appears, at least very early on, that they re hinting toward more weakness in the market. As I always point out, this is an overnight market, there's a lot of time before the open and there are a lot of markets that are not open so I'm not making any big forecasts here, but this is a change in the opening FX/Futures market which was very dull and flat earlier, it was at least worth a post to keep you in the know as things develop.

Have a good night, I'll see you in the morning.

Opening Indications Dull

So far the FX and Futures markets' open has been pretty unremarkable, there's a very slight drop in NASDAQ and S&P futures, certainly nothing notable; in the currency markets the EUR/USD, EUR/JPY, AUD/JPY and several others have opened unremarkably as well, a slight gap and the filling of the gap in most cases.

Now that the Sequestration is in effect, the sentiment should be interesting, I imagine increased volatility, but I think the market is going to be more forward looking in its fears, from politics in Europe and specifically Italy to the US and events that are far more worrisome than the sequestration such as the end of March when the funding mechanism called the "Continuing Resolution" expires, if the Senate doesn't pass a budget by mid April, the debt ceiling will be re-instated. The debt ceiling suspension expires May 19th, by mid July the government would have no funding and be automatically shut down.

 I found volatility interesting on Friday, specifically futures trading up while spot was down and that rare moment or glimpse of what appeared to be something important in accumulation of volatility futures. I have some gut feelings that we will be in for a few surprises, but I can't quite put my finger on it at this point, perhaps the market will have more to tell us, for now though, it doesn't change any plans or outlook/analysis, in fact I believe our analysis over the last several months has led right to this moment in not only the market, but the economy.

As I often mention, changes in character leads to changes in trends, Friday obviously was a pinned market, I do wonder what it would have looked like if it were not an option expiration day.

I'll monitor the futures and FX markets tonight, should anything change, I'll let you know, otherwise we'll take a look at pre-market indications.