As I said, we're right on schedule.
(This was [premarket before the open, the bid/ask hash marks are light blue on the right side of the chart).
However, it is interesting that even some of the smarter websites that cover the market would explain overnight futures and this morning's gap up after yesterday morning's gap down like this...
"It was another day of ugly overnight macro data, all of it ouf of China, with industrial production (8.6%, Exp. 9.5%, Last 9.7%), retail sales (11.8%, Exp. 13.5%, Last 13.1%) and fixed asset investment (17.9% YTD vs 19.4% expected) all missing badly and confirming that in a world of deleveraging, the Chinese economy will continue to sputter. Which is precisely what the "bad news is good news" algos needs and why futures levitated overnight: only this time instead of latching on to the USDJPY correlation pair, it was the AUDJPY which surged after Australia - that Chinese economic derivative - posted its third best monthly full-time jobs surge in history!"
But how can that be true if we already knew these things were true in advance? Just from yesterday, forget about the bigger picture for this week...
Risk Off? 9:32 a.m. Wednesday
"China seems to be the real concern as evidenced by the AUD/JPY, but is this truly risk off and divergences run over? With HYG still positive... 1 min AUD/JPY (is positive/accumulation), but more importantly...The China sensitive carry trade (AUD/JPY) looks like there's a 5 min positive divegrence..."
So we already knew that the pair leading Index futures overnight was being accumulated yesterday morning well before this post at 9:32 a.m. as a 5 min divergence was nearly 16 hours old at that point.
Or...
I'm Guessing Bounce... 9:51 a.m. Wednesday
"AUD looks like it has a substantial positive divegrence which would send the pair higher and the Index futures/market with it, could this morning's move be a nice head fake? I'd say there's a 70% chance that it is, we need to see accumulation in the averages over the next hour or two to confirm.... And the other half of the pair, the Yen or JPY,substantial negative 5 min chart, confirming what we see on the AUD as well as the Carry Trade pairs and ES 5 min.
This might be a decent time to take some "QUCIK" short gains, I mean short term trades that were intentionally set up that way, not core short positions."
This was posted at 9:51 a.m. yesterday. What we see this morning in the market, we already expected a full 24 hours in advance and as such moved to take advantage of what I called a "Head fake" downside move yesterday with actions such as...
In which we took +44% and 85% gains off the table in puts and not only that, increased our long hedge...
IWM / QQQ Hedge Add to at 1:44 p.m. yesterday which is at a beautiful gain this morning doing what it was meant to do.
Everything we had known since Friday was coming together yesterday on a head fake move lower even though we expected it to move higher and took all of the actions in preparation for that eventuality that we expected this week, as of 1:28 p.m. yesterday everything we knew was laid out in...
Full Update from yesterday afternoon
From the positive divergences in the averages to the HYG positive divegrence to be used as a lever of upside market manipulation to the AUD/JPY accumulation on the move lower and the individual $AUD accumulation and Yen distribution which has moved overnight as we expected, to the short term signals in VIX futures confirming and GLUING all of this together, but as I said at the start of the post...
"Nothing in this analysis contradicts what we expected for this week as of the close Friday afternoon"
Even our Leading Indicators... post confirmed everything we were looking for ...
"As far as what we expect for this week, what we expect to see and what comes next, Leading indicators are spot on."
Again the point is, how can the simple fundamental truth of the market through overnight economic events (unless they are known and acted on in advance) explain something that we already knew was coming not just 24 hours in advance, but since last Friday afternoon, the AUD/JPY was something we knew 24 hours in advance as it was hit hard yesterday, but we knew before this time yesterday morning it would not only come back, but lead the market.
This is what market cycles are all about, it's not just the stages, it's the deliberate, set up cycle that Wall St. sets up and sees through, like I often say, "Very little in the market is random", how else could we know day , days or nearly a week in advance based on accumulation and distribution of various assets?
So even some of the smartest guys are still missing that one essential truth, just how manipulated this market really is, it's going where Wall Street set it up to go and that started Friday afternoon.
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