Quick Futures Update

Despite the early gains in the averages shrinking since just after the European close, there are positive signals in the daily charts, while not all yet at traditional reversal (bullish) candles, as I said, there are promising signs (in the context of the IWM bounce/head fake scenario we have looked at).

As for 1 min charts, like this morning there's little of note or excitement...

 ES 1 min in line, positive, in line, nothing too exciting.

 Similar NQ 1 min action with a more clear negative intraday divergence at the intraday highs, but otherwise very similar.

 And TF with its own chart, but the end result the same, rather dull intraday 1 min charts.
At the 5 min charts, this is where we have had a deficit of positive divergences to bridge the ones on 7 min charts and bring the market to action as HYG, TLT and VIX futures are suggesting as well as other assets, the short term oversold condition, short term oversold breadth and the general concepts of head fakes and mass psychology.

On other 5 min charts, Gold is about in line, Crude oil is as well as are ES and NQ index futures,  however take note that these could flip to positive 5 min charts easily overnight with strength in the 7 min charts.

 ES 5 min nearly perfectly in line just as NQ mentioned above, however,  the one average I expect to lead, the IWM/Russell 2000 has a much different looking 5 min chart.

TF 5 min Russell 2000 futures, clearly positive.

With just about all index futures positive on the 7 min chart, as I said, the 5 min chart could go positive between now and the overnight session in a snap, thus these 7 min positives are of interest.

While I don't have a great feel for the 4th ramping lever, USD/JPY, I can see that there's some 5 min and 7 min 3C weakness, which would help USD/JPY higher and the index futures along with it. $USDX divergences are much less noteworthy, but all that is really needed is a weakening Yen to push USD/JPY higher.

ZB/30-year Treasury futures are also negative in the 5 min space, add that to the signals in TLT.

And VIX futures are negative in the 7 min space, also to be considered with the earlier VIX update/s. Thus it's still the 5 min charts that are the only thing that I'd want to see before making any decision as to whether piggy back longs are worth the risk. However as noted earlier, the 5 min chart can and often does go positive in a short period, often during the overnight session and don't forget tomorrow we have the F_O_M_C at 2 p.m.

While I'm not going to presume to have any idea what the F_O_M_C policy statement will look like or the market's reaction to it unless a clear leak is obvious as we have found on about 3 occasions, I will remind you as always, BEWARE THE F_E_D KNEE JERK REACTION AS IT IS ALMOST ALWAYS WRONG.

While the knee jerk reaction is typically faded within hours to a week or two, it is nearly always faded meaning the initial move is often the wrong move. Seeing the recent developments since late last week, I find it interesting they are coming to a head the day before the F_O_M_C, right about the time the market expects the Santa Claus rally and among still bullish sentiment within the "Buy the Dip" crowd with manipulation lever assets coming on line like Yields/Treasuries, HYG, VXX and possibly USD/JPY with a weakening JPY.

It could be that no matter what the F_E_D says, they've already set up the market to respond favorably and market participants will buy that no matter what the F_O_M_C says if they see prices moving in the correct direction, THUS WHILE I HAVE NO PROOF THAT OUR ANTICIPATED IWM HEAD FAKE MOVE IS LINING UP TIMING WISE WITH THE F_O_M_C, IT WOULD MAKE SENSE BEING THAT THE INITIAL KNEE JERK COULD BE THE STRONG MOMENTUM THE IWM NEEDS TO MAKE THE BREAKOUT AND THE FACT THAT THE KNEE JERK IS NEARLY ALWAYS WRONG AND FADED, WHICH IS WHAT WE EXPECT TO HAPPEN TO THE IWM AFTER IT HAS MADE ITS $118+ BREAKOUT ABOVE THE 6 WEEK RANGE.