A.M. Update

Overnight, in fact just after the North American close, USD/JPY started selling off, futures limped lower  in near perfect 3C confirmation, to a very strange level as you'll see. There really was no macro data or news that caused this, I suspect it's part of the unwind of the head fake (or what would be more specifically a failed move) above the 3 month range around SPX $1900 (last Friday I said the signals looked like that move would be unwound this week).

 5 min USD/JPY selling since right after yesterday's close

The 1 min USD/JPY found some support with small accumulation right around the 4 a.m. low which bounced it. 3C does look to be in leading positive position, but this divergence is so small, I'm not sure that it will be very effective and 3C hasn't pivoted up yet to lock it in, it may just fade to "in line" or worse.

The carry pair and ES moved like this...

 USD/JPY overnight, ES in purple  1 min chart...

I talked last week about the dislocation of SPX/ES prices at least 25-30 points above the extrapolated final F_E_D balance sheet expansion meaning it has priced in the full expansion until the end of the taper and is still 25-30 points rich or above the long term correlation, the CONTEXT model for ES showed us the same, my view is that those points are part of the head fake move above the range we expected, thus part of the reason not only Treasuries are bid as a flight to safety, but VIX is seeing the same since late last week as well in a bid for protection from downside.

You might as well add this to the list of dislocations as it's about right, I mean right at the move above the range.

 USD/JPY and the ES correlation is lost as ES (purple) moves above the range (red trendline) which is the 4 month range in SPX.

This is what I thought would be a head fake move before any significant downside, so far we have had excellent confirmation that it's a head fake move and not an authentic breakout that is supported.

This is ES overnight in to premarket, as I said above, nearly perfect 3C confirmation and the same for all Index futures.

The more important charts though which have been falling apart since last week are the 5 min and up...

5 min ES leading negative.

 TF, recall the warnings last week that the IWM would see better relative performance than the other averages, it's 15 min chart has a good deal of distribution in to that move.

Here's a 30 min version of TF/ Russell 2000 futures, note not only the relative level of 3C vs price at points A & B, but the more recent leading negative divergence out on a 15 min futures chart. This is the same kind of damage I was talking about yesterday.

And here we are all the way out to 60 min, the last negative divergence (following the green confirmation arrow) took TF down, the new leading negative is a lot bigger and in worse relative position.

And VIX 15 min as it start to see positive divergences last week.

Gold is up, there are a lot of reasons being thrown about, but I remind you of the correlation between the market and gold recently.

SPY green/GLD red, 60 min chart. It's not perfectly inverse, but pretty close.