A.M. Update

There's not much new overnight other than ongoing troubles in China peaking through the curtain every now and then telling us there are real problems, FXO/FXP is a trade I'm looking at. Yesterday  a Chinese company called Huatong Road & Bridge failed to meet a principal repayment which put it at risk for being the second ever "on-shore" Chinese default, but at the last minute it seems the local government has stepped in and taken care of the payment to avoid the second default. There are also signs that housing market restrictions are being lifted in an effort to boost badly lagging housing sales, there's trouble in China, longer term members may recall when we first saw it in commodities just before China started printing Manufacturing prints that were recessionary several years ago.

In any case, nothing surprising in the market overnight considering the IWM 10 min divergence I have been talking about for over a week now. What is interesting is the Index futures for ES/NQ and TF, yesterday we saw more deterioration, well overnight in to a momentum lift based on the AUD/JPY pair, we saw more damage on the 5 min chart which is the one I'm especially interested in as far as bounces, TF is now in a leading negative divergence as more and more selling is taking place in to any form of higher prices, this is very much unlike any bounce we have seen up until last week's SPY/QQQ attempted bounce when we saw very aggressive distribution as soon as the gap up on the first day.

I'll be watching the 10-min IWM chart, there are a number of companies I expected to bounce in the momentum crowd that have been beaten down badly and hoped to short in to those bounces, I'm not sure if it will happen at this point without some sponsorship from one of the major averages should the IWM give out which it looks like it may do very soon.

I'll have some charts up in a few minutes.