A.M. Update

Good morning, I hope everyone had a fantastic weekend.

The A.M. Update is simply a continuation of last night's Japanese Recession update and the forecasts contained in that post from late last night (Sunday).

For instance from last night's post:

" With such a sharp sell off in the Nikkei 225 futures, I expect some kind of dead cat bounce to be likely as the 5 min chart seems to indicate, but the macro theme should reassert itself taking the Nikkei futures lower."

 "However the 1 min USD/JPY seems to depict that probability along with the 5 min Nikkei 225 above and this 1 min Yen chart below."

"Yen 1 min chart, however as mentioned, I expect that the macro theme will reassert itself after a dead cat bounce which may coincide with the Week Ahead's early strength Monday fading in to weakness through the rest of the week."


The theme of last night's post being the Nikkei which closed down -2.96%, the most since August, would see a USD/JPY driven bounce, similar to the early week/Monday market strength I suspected in Friday's "Week Ahead " post with that fading in to the macro theme weakness.

Since the posts above, the Nikkei futures bottomed right about where I was seeing the overnight Yen divergence above which now looks like this...

 The Yen with the negative divergence last night just minutes off its overnight high did in fact give the USD/JPY a brief reprieve from the short squeeze sending it lower...

And putting in a second bottom "W" and divergence before heading higher in to the European open several hours after last nights post, also giving US Index futures a reprieve from the overnight losses that saw them well below Friday's lows...

ES from last night...

 ES from yesterday's open to last night's lows, well below Friday's lows and the recovery anticipated last night from Yen weakness and a USD/JPY recovery or dead cat bounce taking ES higher, but not recovering last Friday's close.

ES at last night's lows and a bounce in to the European session, currently in line, exactly as anticipated last night and close to Friday's Week Ahead early anticipation for the early part of the week considering the lows we were at last night, it's a pretty unbelievable forecast from Friday when considering the lows we saw as last night's Japanese GDP post was released.

Nikkei futures improved since, but are now looking a bit weak again, whether they form a larger "W" base and we get the dead cat bounce as proposed last night or whether they just continue lower from here will be important in judging the early week US Index futures.

Nikkei Futures anticipated improvement off last night's lows, but the divergence has already soured, perhaps a "W" bottom or perhaps a continued fall.

All charts are luke warm right now, except massive damage done to Russell 2000 Futures on a 60 min chart last night alone...


As for Japan, there should be a lot of news as Abe didn't seem aware of Kuroda's increased QE and Kuroda doesn't seem pleased with Abe's delay of the tax hike which his advisor said overnight is now "Out of the question", that's if any of them make it through the anticipated December elections (GS).

We shall know more shortly, but so far, exactly as expected since late last night's post.