The Week Ahead

I hope everyone had a relaxing weekend.

This week and moving forward you'll want to watch the Nikkei 225 as it is showing us what fear looks like and how quickly a few days of fear can consume a month plus of very parabolic gains, FEAR is always stronger than greed in  the market.

Lucky for us as we entered a number of very short term call positions late last week on positive divergences, the US Index futures are pushing higher as expected and as we set up our trades for late last week (mostly Friday) and they are doing so on the open of the Nikkei, which is like any other market, after 3 days of horrific declines, it is going to show some volatility on the other side and keep traders off balance, that's the same thing we are looking for in the US markets, but we have short term trades and tactical moves for long term strategic positions, this move will serve both so long as it holds which I believer it will as divergences that are set in motion, even last week, rarely fail.

The white arrow is Sunday's futures open, but with USD markets closed it was very thing and volatile (in many cases) trade. The white box shows ES taking off on the open of Japanese markets tonight, excellent for our new positions (calls), but notice here on the 5 min 3C chart, 3C is lagging, this speaks to the short term tactical entry on price strength to set up or finish setting up longer term trending trades (mostly short).

I'm not even going to try to extract anything from Gold futures tonight, I just don't see enough to go on, but there was an algo ram of GLD down and then an algo pump of gold right back up-it sounds like stop hunting or some sort of accumulation.

The Yen is taking a pretty hard dive right now, explaining the volatility and bounce in both the Nikkei and US Index futures, but notice its bigger picture is still a very strong positive divergence so both the spill and the positive divergence serve both our purposes well, the spill for the short term call trades entered last week and the positive divergence for the bigger picture of a market dump when this run of upside volatility is over.

This is what the yen looks like and below the volatility of the Nikkei, this is why I'd rather be in position quite a while before all of this begins as we have been, at virtually any point sellers can panic no matter what the divergence and you have an AAPL situation of the market being cut in half.

 Yen dumping on a 5 min chart, this is the Yen.\/Market inverse correlation I've been talking about.

The Nikkei on a 4 hour chart with a clearly developed negative divergence on a long timeframe and...

1 min upside volatility in the Nikkei after 3 days of getting slaughtered which comes after months of a parabolic run up-this is volatility, this is why we are using hit and run tactics with trades that are short term-otherwise you try to trade this market any other way and it's a meat grinder or washing machine.

THE PAIR TO WATCH IS THE USD/JPY, THE BOJ WANTS THE PAIR AROUND $100

 This is a 4 hour chart showing the trouble I have been talking about for 2 months, the Yen is under heavy distribution and the pair could break $100, the BOJ doesn't want it above as it was last week, nor do they want it below, this will tell us if the BOJ really has lost control.

The drop in the pair on a 1 min chart from nearly $104 has been sharp, now it too is seeing the typical increased volatility, this should be a very interesting week, especially from the Japanese perspective which is the 3rd largest economy so it matters.

Make no mistake, what is going on right now was set up and in motion last week, remember the HYG posts and the calls in numerous assets? We didn't enter those positions on a lucky guess, this was set to rock and roll last week, if this doesn't show you the market is rigged and we can take advantage of it, I don't know what will-just read some of Thursday/Friday's posts.

 HYG last Friday in a perfect accumulation range with a leading positive divergence which just so happens to be one of the 3 SPY arbitrage levers, no coincidence there, the market needs HYG as the institutional demand isn't going to be there, just retail.

The same in the IWM, it's bigger picture deeply leading negative, short term it gained a LOT of positive ground Friday.

Don't judge early trade too fast, we do have some short term negative divergenceS in intraday timeframes, there may even be a little more accumulation for this run and all of these runs are designed to sway emotion, REMEMBER THAT. 

THAT BEING SAID, THAT MAY GIVE US SOME ADDITIONAL OPPORTUNITIES TO SET UP SHORT TERM TRADES, BUT AGAIN, BE CAREFUL.

WHEN THE HERD STAMPEDES, IT DOESN'T MATTER WHAT SHOORT TERM DIVERGENCES ARE WHERE, THE MARKET IS GOING TO TRACK IN THE DIRECTION OF THE LONGER TERM NEGATIVE SIGNALS AND IT JUST TAKES A FEW BULLS SPLITTING OFF FROM THE HERD TO CAUSE A STAMPEDE, STAY ALERT, STAY NIMBLE & DON'T SWING FOR THE FENCES HERE.