Futures Update

I had hoped to get this update out first after the A.M. Update as it showed good reason for the market to react in this manner, the failure of $102 two times in a row over several hours is the kind of "failed test" I was talking about yesterday.

Of course some of these charts may have changed a little since their capture right around the open, but not enough to make them invalid.

First the USD/JPY...

 USD/JPY 1 min since 9 pm last night to present, the runs above $102 where both distributed, one around 3:15 a.m. and the other around 8:30 when Empire Manufacturing had an excellent print and Initial Claims also beat.

 This is the same chart, just without all the notations, the yellow line is $102. Notice how quickly $102 failed, this is the "Failed Test" I was talking about yesterday that we'd likely see before seeing serious downside in the market.

 This is the USD/JPY (red/green candlesticks) vs. ES (purple) and reversion back to the USD/JPY correlation on a 5 min chart, this is something I talked about many times this week and specifically yesterday, especially on the afternoon downdraft.

 This is a 1 min chart of the same, as you can see, at the time of capture, ES had reverted back to the USD/JPY correlation, right now it's probably below it a bit which we saw once this week, that time ES rebounded back up to the correlation with USD/JPY.

 This is the 5 min chart of the Yen which is the reason I suspected USD/JPY make a run at $102 and test it, it still would imply more tests of $102 if it weren't for...

 The $USD weakening as well, at least the 3C chart as seen above on a 1 min, in my opinion this is a signal telling us that the tests have failed and the $USD is getting ready to sell off and take the carry pair as well as the market down with it, the only thing that may pause this is op-ex tomorrow.

When you think about movement in the USD/JPY, the $USD is the long, JPY is the short so any downside in JPY helps send USD higher, any upside in USD helps send USD/JPY higher and vice-versa, with both not looking good, it's a matter of which performs worse.

 One of the reasons I only suspected a test of $102 and not much else is because the 15 min Yen charts were strong and the 15 min $USD charts weak, this suggests that after a test the pair would start seeing weakness and the broad market with it.

 This is ES 5 min, it has been amazing how quickly positive divergences in FX mostly last week suggesting this week's break above $102, turned negative, it was almost immediate as soon as USD/JPY pushed above $102 on Monday as you can see above on the chart of ES/SPX futures.

 Other negative market indications have included the longer Index Future charts like this ES 15 min leading negative, the 30 min is leading negative as well.

Only the 60 min was holding a positive divergence earlier in the week...

 Now that has clearly turned negative and VERY quickly after the initial run above $102.

This is ES/VWAP... (Volume Weighted Average Price) which is an indicator smart money uses to gauge the fills they receive from market makers and specialists.

 The weekly ES VWAP shows ES quickly reverting back to USD/JPY, selling would typically occur at the top standard deviation, this is where we saw the charts go negative VERY quickly and "buying" would usually occur at the lower standard deviation, but this is just pure selling.

This is the daily VWAP, except for a few brief moments, where it appears distribution at the upper SD occurred, VWAP has been very negative, walking the lower Standard Deviation.

This should give you some idea of why I feel more urgency now than the last two months to get positions in place, whereas the last two months the 3C signals just have been missing something, that's why I have put out so few trade ideas, luckily so as the 3C signals seem to be right on the money as the market was lateral and choppy, a meat grinder during that period, THINGS HAVE CHANGED.