A.M. Update

It seems yesterday's switch from SRTY core position to moving that to URTY was the right thing to do as the IWM positive divegrence has remained stubbornly in place. Recall yesterday's charts of the averages and of Index futures with the Russell futures being the only one of the majors with a leading 5 min positive divegrence while NASDAQ and SPX futures were leading negative.

 A rising tide really does lift all boats as all of the majors are gapping higher, this "seems" to be on the back of overnight ramp jobs in JPY pairs. We will see whether the SPX, Dow and QQQ have the same relative performance as the IWM, but this is finally the move I have been waiting for before releasing new short or add to short ideas, there was no point in putting them out before the IWM made its move higher.

World markets are doing just as well with Japan back from a holiday with a +.84% gain, Hang Seng + 1.69%, Shanghai +1.02 and at last look in Europe the FTSE 100 +.84, DAX +.97 and CAC 40 1.10%

Just before US CPI data was released, about 10 minutes before, someone tried to slam gold with approximately $400 mn notional in selling, however on the CPI release Gold rallied back up at least 12 points to 1316.

Speaking of CPI and gold rallying, it is because of the clear ongoing inflationary trend that Yellen calls noise. Y.O.Y. CPI came in at 2.1%, above the F_E_D's mandate, which isn't a big deal in and of itself, it is the trend over the last 9 months that is worrying, the Rate of Change.  Core CPI fell slightly to 1.0% Y.O.Y. but when 2/3rds of the increase in June CPI is due to gasoline (+3.3%) it's pretty hard to ignore and dismiss as noise, this likely having roots in global tensions as well as other seasonal factors.

The main risk today (seeing how the market has behaved recently in acting as a discounting mechanism for the first time since 2009) is the EU Foreign Ministers' meeting to talk about EU sanctions on Russia, it is not clear they will actually announce sanctions today or merely identify individuals and other entities they want to target without actually introducing sanctions. Anything bigger than what the foreign ministers can accomplish will have to be done by heads of state and they aren't due to meet until August 30th unless they call a emergency security council meeting. Russia will be holding its own today headed by Putin on the topic of protecting Russia's sovereignty and borders as NATO forces build up on various borders.

The gap up in the markets shouldn't be too surprising considering how persistent the IWM divergence has been, however like the SPY last week and QQQ, we will see shortly how aggressively higher prices are sold and have a better feel for how long this bounce can last. I will likely be quick on the trigger to move back to SRTY as that is trading in the direction of highest probabilities in a very volatile, uncertain time.

After seeing how the market reacts to higher IWM prices and at what rate of distribution (last week was very strong, very fast in SPY/QQQ) I'll have a better idea of which assets look to be first up on the Trade Ideas short list.