Futures Update

As I said in the last post, I think early action this week is biased to the downside enough that it is tradable, the divergences started Thursday afternoon on last week's shortened holiday trading week (closed Friday) and as we have seen so often, the EOD signals tend to pick up where they left off on the next trading day, even over a 3-day weekend... the charts I just showed of the averages (ETFs) made that clear, but it may be the Futures and particularly the USD/JPY that are even more damning in sending the market lower early this week (as I said Friday, early Monday the market may need to put in a little more work before a move down which could open the door for a larger move down if the signals deteriorate even more and migrate to 5 min charts).

On the economic front overnight Japan did release more evidence that the BOJ's policies led by Abe-enomics are a total failure as Japan posted the largest Trade Deficit EVER! Russia also came out and said they may enter a "technical recession" this quarter, a recession is considered to be 2 consecutive quarters of negative growth or negative prints. The apparent culprit for Russia? Capital OUTFLOWS and "Contracting GDP".

Any market downside will probably be blamed on one of those two things (although the signals were there clearly before any such news was made public (wink, wink to the High Frequency Traders and Goldmanites)....

A third event that may be blamed (which also didn't occur until after the signals were firmly in place Thursday afternoon) was the re-escalation of tensions in Ukraine with 5 people being killed this weekend at a Pro-Russian gathering in the Pro-Russian controlled eastern Ukrainian city of Slaviansk when it is reported that 4 cars of "ultra Ukrainian nationalists" opened fire on a pro-Russian rally. Apparently 3 Pro-Russian checkpoint guards were killed and subsequently two of the "alleged" ultra-Ukranian nationalists attackers. I say "alleged because this event comes on the heels of Putin admitting for the first time, that Russian tanks/forces positioned on the eastern Ukrainian border would have the green-light to roll into the Ukraine to protect the separatists that Putin says are being "Targeted by their own government". 

For Ukraine's part, the SBU accuses Russia's GRU (Military Intelligence) of not only being in Slaviansk, but orchestrating the attack as an excuse for Russian forces to roll in to protect ethnic Russians, basically the "Crimea" playbook with a bit more bloodshed already.

I doubt any of these events are connected to the signals from Friday or the decline/[pullback I'm expecting early this week, although escalating circumstances could certainly have a snowball effect.

As for the Futures charts...

 ES 5 min leading negative

 NQ 5 min leading negative

TF 5 min leading negative

VIX Futures intraday going positive

VIX Futures 15 min Leading positive

Very rarely do we get FX "pairs" signals beyond 1 min, sometimes 5 min, this is the USD/JPY 5 min with a deep, recent leading negative divegrence.

This is the 1 min $USDX with a long overnight and Monday a.m. leading negative divegrence, when the $USD falls it pressures the USD/JPY lower which drags index futures lower and the market averages lower.

As I said Friday, I think we see a pullback early in the week, maybe today, but it looked Friday as if it needed a little more work before.