Overnight Futures-CHOP

The feeling I got today from the market averages, even though they placed an actual gain, but in terms of volatility it wasn't that impressive considering it would have been an SPX breakout and the first close for the SPX actually green on the year, but the market could not hold it in to the close and sold off pretty hard right through VWAP on some size which is a trend I've been noticing the last week or so, the pros are coming in and  selling (that can include short selling) on the close as they are notorious for, they are just more visible recently.

The feel I get as far as trend is lateral chop. When I said "I hope we have some more time up here to set up core short trend positions" on Friday, I believe Wall St. is doing the same exact thing, thus it's not all that important to do anything but hold the market in place or put better, prevent it from dropping until positions are filled out, WATCHING ACTION AROUND VWAP RIGHT NOW IS PROBABLY VERY USEFUL IN UNDERSTANDING WHAT IS HAPPENING IN THE MARKET.

 USD/JPY CARRY CROSS overnight is really nothing but chop, it is chop however that is holding $102, I posted Friday (and a couple of other times late last week) specifically about the USD/JPY and the broad market and the importance of $102.

Any divergences on this chart are nothing more than steering, there is no accumulation of a position or distribution of a position, it is what I call, "Steering divergences", just enough to keep the pair from falling, just enough to keep the pair from rising, essentially keeping the pair sideways which is TIME in the market, TIME to do something and thus far it looks like selling/Short selling.

TIME, the VERY same thing I was hoping we'd have this week to get core short positions in place.

 As to the AUD/JPY pair that BofA was pumping earlier today, look at price (the arrows here are just following price, there are no divergences that indicate anything other than lateral price action which again means "TIME"at this level.

Just look at ES futures (S&P E mini futures)...

 There's no divergence there at all that shows an underlying trend except the THIRD trend (up down and lateral), look at price, it tells the story, sideways =TIME.

We have the exact same thing in NDX futures- to divergences that are accumulating or distributing intraday/night, just steering and price tells the story or trend, sideways.


As I pointed out a couple of times last week, it seemed like the pros, who are known for trading the last 15 to 30 minutes of the day or trading the close, are more active or at least more visible.

You know how VWAP is used as an institutional grading tool for the fill of an order, whether it be to sell, buy, sell short or cover, VWAP is the standard, it looks like when VWAP was broken toward the close, there was some panic.

 This is a 1 min chart of NASDAQ futures Monday through regular hours in to the close at 16:00. First note how flat or lateral trade is almost all day after the initial opening ramp, then  look at the volume shoot up as VWAP is broken at the close.

It seems there is a priority on maintaining price and buying (literally) some time to do exactly what it is I said I wanted to do late last week, however there's a lot of nervousness as VWAP is broken and sellers are thick as it breaks. There is likely a large algo presence set to watch and react to a break of VWAP just as there is likely a large algo presence to try to maintain VWAP and a lateral trend.

For a Specialist or Market Maker (who get paid to fill large institutional orders using VWAP as a grading tool as to whether they got a good fill or a poor fill) selling or filling a short sale above VWAP would be considered a good fill and they'd likely get more business, however you can see when there's a break of VWAP, the nervousness is palpable as volume shot way up as price broke below VWAP, this isn't buying or price would be shooting up, this is selling.

So far I think our feel for the market late Friday was right on, I wanted to see some time to get some core short positions in place, ultimately we want to follow in the steps of the big boys who move the market and so far it looks like they are looking for the same thing, some time to fill positions, but for them it is a necessity as their positions are so much larger.

So as you can see, both FX and Index futures are trading very choppy as it seems there's an effort to maintain a sideways/lateral market.

I'd say USD/JPY $102 is still a very important level and when that breaks, there won't be much if any time left to fill shorts at favorable prices.