Market Update

Index futures are really flying intraday so I expect we'll see more of a lateral trend form here, likely building a little accumulation pocket and sending the market at least up to this morning's range, perhaps higher, but this will depend on the divergences building more. We are already seeing some change in intraday trend and volume has increased as in a short term capitulation (bottoming ) event.

In addition the $AUD is going positive and the Yen negative intraday which should send the AUD/JPY pair higher which is what the market is tracking, even though there was obvious relative weakness this morning after about 2 days of following the pair tick for tick, but this seems to be another event suggesting we will see an intraday bottom and upside reversal in the making.

 Intraday $AUD has a small intraday negative at the highs of the week and now we have a clear positive divegrence which is confirmation of the positives in Index futures and the market averages that you'll see below.


The Yen did not have that much of a positive divegrence, I take it this was more AUD centered and likely directly centered on China. The negative divegrence in the Yen confirms the $AUD positive above and all of the positives below for the scenario I described above regarding a probable reversal back to the upside.

Remember it is AUD/JPY meaning AUD long and JPY short so that's the direction each currency needs to move for the pair to move up and support the market. Please do not forget though that I'm talking about SHORT term analysis of the situation right now, all this week the market has proven itself to be VERY weak, thus my main positioning is still largely short with inly two hedging longs that would be fine at a total loss as the Puts would make so much more money.

ES 1 min leading positive divergence e(SPX)_ intraday

 R2K futures intraday with a strong leading positive

NASDAQ futures intraday also leading positive

 QQQ 1 min positive and a larger push of volume which is usually seen at a short term bottom.

IWM was in line at the last update, it is now starting a positive as the trend starts moving more lateral from down, also a little volume surge near the lows.

SPY is showing the same positive divegrence and a volume surge near the lows which is part of price/volume analysis, it typically acts like a short term oversold condition which is what I think is happening now.

DIA is going positive as well.

So we need to see more sideways movement before we'll see a move to the upside, this is also where the divergences have a chance to strengthen.

The AUD/JPY is confirming as well as the single currencies all of the index futures and market averages so this looks high probability, but we are still very early in the process.