Market Update

This morning the Index futures kind of told the story with 5 min TF/Russell 2000 futures in a small, but still leading positive divegrence, the NASDAQ 100 futures in a weaker leading positive divegrence (this less than a day old and the SPX E-mini's leading negative.

This is more along the lines of what I was referring to last week when I said I expected the major trend for the week to be down with some noise here and there to the upside, mostly along the lines of a gap full which one of the majors has put in, but not been able to hold.

First the USD/JPY which has been leading the Index futures since early morning looks like its about to run in to some trouble, ES is already having trouble holding the correlation as USD/JPY stops at $102 (the BOJ line in the sand) were hit earlier today.

 USD/JPY 1 min since 10 p.m. last night with positive divergences from around 10 p.m. (see A.M. Update) and again around 4 a.m. , but recently the 3C charts have been falling off as the inline status is turning toward a negative divegrence as higher 3C highs are not being made and we have a lower 3C high currently.

 ES (purple) vs the USD/JPY shows pretty good correlation until just after 10 a.m. which is notable for another reason in intraday breadth I'll show you.

As for the individual components that make up the carry cross, we often get early signals there first.

 The $USDX intraday 1 min is going negative so a decline in the $USD will pressure the USD/JPY lower, but it also depends on what the Yen is doing. I suspect with the pair over $102, the BOJ is likely intervening in the FX market as that seems to be their line in the sand.

The stronger 5 min 3C chart of Yen single currency futures went from in line on its move down (good for USD/JPY moving up) to a positive divegrence on a stronger timeframe suggesting to me BOJ intervention is likely underway right now, this is important because the USD/JPY is more or less the market's sponsor today (AUD/JPY yesterday, but likely RBA cuts have weakened the $AUD which is something posted here yesterday).

As for the averages...

 IWM 1 min looks the best of the major averages, not surprising given the 5 min Index futures charts where it looked the best by far there too, but this is also a very small divegrence in the scheme of things and along the lines of the "Noise" I described last Friday for this week. The IWM HAS NOT filled Friday's gap which is the minimum I expected within the "Noise" description.

The intraday charts from 2 to 3 mins for the averages aren't showing any actionable divergences and are either in line or just noise, in this case negative from last week's IWM bounce at its highs and pretty much in line now, no divegrence like the 1 min chart above, again limiting the divegrence.

 The 5 min charts are still representing the trend from last Friday that caused me to say I believe market downside is in store for this week with no positive divergences to fuel anything on the upside and even with them the two previous weeks, the moves have been exceptionally weak.

 QQQ 1 min with yesterday/s a.m. / intraday lows with accumulation on the 1 min chart seeing distribution at any price highs intraday, much like yesterday.

 QQQ 5 min still in leading negative position, but it did fill the gap intraday, just didn't hold.

 SPY 1 min is one of the worst looking and 5 min Index futures 3C charts reflected that before the open today.

The decline from 10-11 a.m. was significantly stronger than it appears.

And the 5 min SPY still leading negative and actually adding to that divergence, still no gap fill although it came close. The 10 a.m. to 11 a.m. intraday decline was stronger than the price charts reveal.

 Looking at intraday NYSE TICK we were in a +/- 750 range until that decline where we hit bearish extremes of more than -1250, but little on the upside above the moderate, normal range of 750.

And the TICK trend, still not impressive in any way.

The MSI has not been able to offer any support thus far.

Although it's a bit earlier than I prefer to look at them, Leading indicators are not showing anything surprising or sneaking up on us.

 HYG / High Yield Corporate Credit is adding to tehe downside rather than leading the market higher as it often does as a short term manipulation lever, this is massively dislocated for the month. There looks to be a little lateral movement in HYG (blue), this may allow a short term base intraday to form so I'll be watching that as well.

As for Yields, the 30 year is showing more oif a flight to safety as Yields are out of line with the SPX, showing the normal correlation is lost and favoring a flight toward the safety of yields, of course this "could" be F_O_M_C related, but for now it's something standing out.

The benchmark 10-year yields are doing the same.

The 5 year are similar, but less extreme.

As far as watchlist components and alert areas I have set, there are a number of assets either moving closer to the levels set for possible trade alerts or they are seeing deterioration in 3C charts, AAPL would be one example of deterioration, I would not short it here, but it is moving closer to that eventuality.