A.M. Update

Good Morning, I hope everyone had a fantastic weekend, ton those of you who sent in pictures of your weekend (especially the nice fishing trips), thank you, I'm really happy to see that you've found a balance in the market and life. For many years the market was all I did, every day, every night, every weekend and although I learned a lot, if you are too close to see things objectively, all of the knowledge in the world doesn't translate in to anything other than book smarts.

So, if you've had a great weekend (whatever it is you like to do, biking, beaching, traveling, etc.)  and feel like sharing some photos, I love to travel, get new ideas for things to do and maybe visit you in your area if you'll have me and Andrea for a weekend (she's very pretty, far more interesting than I am and the kind of person that makes your life better just from having known her). In any case, thanks for the pictures! Here's our weekend...

 Andrea's a Helicopter pilot so we went for a check ride...

We dressed the dogs up for the Pirate and Mermaid festival, this is Andrea's dog Angel as a mer-dog.

 And a night out... Andrea

And the beast...


As per last Friday's The Week Ahead post in which we expected...

"I'm pretty much back to fully short, initially looking for a wider base, but if we don't see accumulation on the way down, then those shorts will just stay in position until the next inflection point....Right now I'm expecting we'll see downside Monday, although there may be some relative performance difference as we have been seeing, largely between the major averages and the IWM."

Thus far, that's where we are at with relative performance issues specifically in the IWM in the early going.

European / ECB Bank stress tests came out about as expected with 25 of 130 failing, a lot of Italian banks which are getting hammered, at least 4 have gone limit down and have been suspended for trading. A lot of analysts feel the stress tests were sugar coated as they didn't test a deflation scenario, apparently to keep too many banks from failing, thus the credibility of the tests is in question.

Today is POMNO Monday in the US at 11 a.m., the last if nothing changed in F_E_D guidance, about $1 bn in long end bond purchases from 2036 to 2044.

Wednesday of course we have the F_O_M_C, but no press conference. There's not much of an expectation that the economic outlook will change, POMO/QE is expected to expire as guidance has forecasted from the F_E_D and really there's not much in the way of surprise expectations, but as always, beware the F_E_D bases knee jerk reaction, it's almost always wrong.

There is some expectation that the F_E_D's guidance of "Considerable time" will stay in the language, but more and more are expecting it to be "Sooner, slower".

We also have 160 of 500 S&P companies reporting this week including Pfizer, FaceBook, Exxon Mobile and Berkshire Hathaway among the biggies.

As for 3C, it's just as I expected, with 5 and 7 min charts negative and beyond.

 ES 5 min showing a deep leading negative divegrence as expected for this week early on...

TF/R2K futures 1 min with the overnight session, the start of futures trade yesterday in green and Friday's close in red with a negative divegrence just after the European open as the bank stress test results seem to have had an impact (released yesterday) as Financials traded lower, especially in Italy.

 The 7 min chart (usually when 5 and 7 min are both divergent, we have strong probabilities in that direction), with a leading negative divegrence in NASDAQ 100 futures

As well as a 15 min leading negative

A Russell 20000 futures 30 min negative and a very clear cycle below...

ES going from positive at the lows mid October to in line to negative, thus out expectations for this week look pretty solid although mid-week we may see some volatility around Wednesday's F_O_M_C,  there's no press conference this time so the "DOTS" are going to get a lot of attention.