I think Friday's analysis still holds, the most probable behavioral move is for a head fake/ stop run below last week's volatile range, but I think that's out cue to go ahead with hitch-hiking longs (some of which we are already in) and eventually selling in to strength (price, not underlying) as well as shorting.
Here's what we have so far as futures have opened for the new week.
Cinese Services PMI have printed at the lowest on record with Australian PMI close to a 5 month low, not a great way to start the week, but this is what we expected.
Japanese JGBs are seeing a flight to safety with yields near 9 month lows.
As for the charts, pretty much what we expected on Friday for a head fake move below the range and then a move above it (the bounce).
Typically 1 min charts don't carry much weight with me overnight, but I figured I'd show where we are with the Chinese PMI at record lows. The NQ/NASDAQ 1000 futures have a 1 min negative divergence. as do the ES (SPX ) futures.
Also The Russell 2000 futures have the same 1 min overnight negative divergence since the opening of futures trade for the new week.
The more important 5 min charts like TF (R2K) are also negative overnight and these mean more to me.
ES 5 min are negative as well
However we use multiple timeframe analysis and the 15 min ES futures (stronger charts/signals) have a clean positive, this would suggest early weakness (the head fake/ shakeout move) followed by the bounce to the upside we have been looking for out of last week's volatile range.
YG/Gold futures 5 min trade opposite the Index futures and have a positive divegrence this is why I closed last week's puts at a gain and opened some GLD calls Friday, I suspect they'll be short lived, but profitable.
The NKD futures (Nikkei 225) 5 min have that positive divergence that goes along with the bounce we are expecting even in Japan.
As for single currency futures as the USD/JPY is all that really matters as far as moving the Index futures, the Yen 5 min is negative which should allow for some USD/JPY/Index futures strength.
Right now we do have some weakness in the 5 min $USDX
As well as the 15 min $USDX, I'm thinking this is enough to send the USD/JPY lower for out head fake move and allow the market to recover and launch the bounce we are looking for.
As far as how long the head fake move should or could last, I've been expecting a day / Monday, but the market always is more extreme than you'd think.
I really think it's this ES 15 min that gets the upside job done, but we'll monitor the market and make sure any downside move is in fact a head fake move by making sure there's accumulation in to it.
ES 15 min positive divegrence.
Don't forget we also have market average positive divergences in fairly strong timeframes as well suggesting a bounce and all through last week's range. These divergences are all right through the intermediate to longer timeframes and all through last week's range as we expected more than a week ago.
SPY 15 negative before last week's range and a 15 min positive through the range as expected.
QQQ 10 min leading positive divegrence through last week's range as well.
And the IWM 30 min leading positive through the entirety of last week's volatile range as well. So far everything has gone as we have been predicting.
I'll be looking for early gains on the GLD galls and an exit so we can double check our signals and load up whatever longs you might wish to trade for a bounce move.
I'll see you in a few hours.
