Sunday Night Futures

I really didn't have to do a lot of work tonight in examining the futures, the signals were there in 3C late Friday and as I have shown numerous times before, they tend to pick up right where they left off whether it be over night or over the weekend so the fact Index Futures are down a bit (the Financial media will tell you it's because optimism about a possible deal from Friday is now lost on the market), really the signs were there Friday afternoon as this EOD Market Update proves...

"My initial impressions are for some sort of consolidation Monday, perhaps just early in the day. The consolidation can be through time or price. I don't think it will last long and if there are well set up call positions, they should be at their best Monday. The reason I don't think a consolidation will last long is because the charts to support a longer consolidation aren't there, the process is mature."

Of course we still have about 12 hours before the open and a lot can happen, but this is just a phenomena that 3C has shown so many times that it is just a probability.

ES Futures on the open ...

 Here we see ES (SPX 5 Futures)  min with a positive divegrence at the low and a negative going in to Friday's close so tonight's open is no surprise at all, for the rest of the analysis just see the linked EOD Update above.

Take a look at the intraday chart of the SPY Friday afternoon...

It's the same negative divegrence, selling in to the weekend / close and it will likely gap down a bit and finish consolidating. Of course any new information the market gives us cannot be ignored, but what it told us Friday was to expect something like tonight, not a melt-dwon in futures, not a straight rocket to the moon, but a continued correction and the probability of some downside in that correction.

Thus far, none of the other futures are standing out, Treasuries and PM's are acting as you'd expect with the Index futures acting as they are. Crude is down a bit, but nothing exciting.

As for currencies, I see a strong probability the $AUD loses ground from here, a m slight probability that the Euro continues on the course it's on  (corrective), short term the JPY doesn't have any strong probabilities, but at the 15 min chart (which is still pretty close to short term), the probabilities go way up that it will see downside and the $USD looks like short term (overnight...maybe a little longer) looks like a tiny bit of downside is probable, but again at the 15 min chart the probabilities go WAY up that the $USD gains ground.

THAT WOULD MEAN THE FX CARRY PAIR OF $USD/JPY IS LIKELY TO MOVE HIGHER WHICH DIRECTLY CONTRADICTS THE GOLDMAN SACHS "SHORT THE USD/JPY" CALL LATE LAST WEEK WHICH AS I ALWAYS SAY, "DO THE OPPOSITE", GOLDMAN ISN'T IN THE BUSINESS OF GIVING FREE TRADE ADVICE, THEY ARE LIKELY LOOKING TO BUY ANY SUPPLY CREATED BY THEIR SHORT CALL.

That's a lesson worth remembering because it has probably been something like the last 7 consecutive Goldman calls have all been stopped out, not because Goldman are on the wrong side of the trade, it's because they are giving misinformation so they can be on the right side of the trade while you would be on the wrong side of the trade.

****In addition, as far as short term market action (even as covered in tonight's GOOG video) a rising $USD/JPY would be consistent with a rising market, in fact it would be an engine to help the market move higher. 

If anything pops up I will update, otherwise  I'm looking forward to a great week and I'll see you in the a.m.

Hedge Strategy / Market Trade Duration & Probability Analysis

This is the video I wanted to get out this weekend to better explain what I'm seeing in numerous assets and I use GOOG as this is where I first brought it up. This makes a trend and increases the probabilities which already fit both trend expectations as well as very near term analysis as posted late Friday .

Whether and actual hedging strategy is incorporated or not is a personal choice, if there's a good set up for it, I'll likely try it with a few assets with the ideal outcome being short term long trades using leverage hedge long term trending shorts which will not only hedge the long term trade, but should raise gains via the short term leveraged traded functioning not only as a hedge, but as a trade in itself and protecting a higher, long term probability position. Establishing or finalizing this long term position is probably, at this point, pretty wise as the probabilities of a hard drop are now beyond the normal probabilities by a fairly extreme amount which I believe is the effect or other side of the coin,  that QE has had on the market. For every action there is an equal and opposite reaction, however in the market fear is stronger than green so the equal and opposite reaction tends to be more violent as it takes about 25% of the time to erase the previous action and then some in most cases.

Here's the YouTube link to the video and there's an embedded video player below.

I'll be checking in later tonight as we see what early futures trade looks like.