A.M. Update

Good  morning, I hope everyone had a great weekend.

Last night I took a look at the Index futures and they had positive 1 min divergences in them suggesting a move higher overnight, however the 5 min and longer charts remain negative and the way 3C closed Friday for the major averages was not only negative on the 1 min charts, but the 2 min charts as well. The concept of 3C picking up where it left off during the cash market has been very reliable and all it needs is 1 min charts, the fact there were 2 min charts negative as well led me to say in the Daily Wrap late Friday,

"After seeing some late day action, I'm thinking Monday will see weak opening trade, that's based on how the charts ended the day. These are the 1 and 2 min charts..."

Sure enough, the 1 min positives from last night kicked in at the European open...

 ES 1 min, positive divergence to the left as Futures opened last night and the ramp up at the European open (green arrow).

The EUR/USD sank and lifted the USD/JPY as once again, we had more ECB QE rumors.

Today it was first Governing Council Member Visco told a German newspaper that the risk of deflation in the euro zone should not be underestimated and urged the bank to buy government debt. This was followed up by an old story put out as new by CNBC, that their sources said ECB QE would be based on contributions from national central banks and paid in capital.

It's not the details that matter, it's the QE chatter; thus EUR/USD down and USD/JPY with all of the correlated assets like Index Futures up , again at the European open seen above at the green arrow where EUR/USD drops.

The combination of a Saudi Prince saying we're not likely to see $80 a barrel oil ever again and a senior Goldman Sachs Energy analyst throwing more cold water on oil's futures sent the commodity lower.

The Shanghai Composite was notably red (-1.71%) perhaps partially because of a UBS note claiming the Chinese Bull market has ended.

As for futures, I'm not sure what happened since the ECB chatter (there's no macro data on the US docket this morning), but just as the 3C charts from Friday's close suggested, the larger gap up we were set to see was significantly paired back this morning. 

As you can see on this 1 min SPX E-mini futures chart, almost all of the ECB QE chatter gains have been retraced. This may simply be because of the short half-life of Draghi and now ECB rumors at large (too much talk, not enough action for the market). In any case, this is in line with where 3C left off on Friday at the close, those charts can be seen in Friday's Daily Wrap.

I'm still at the same place as Friday, there seems to have been some significant damage done Thursday, Friday wasn't good for much as an options expiration max-pain pin day, but the 5 min charts which have plenty of gas have seen damage far earlier than they should have so we'll be looking for whether they can recover at this stage or whether they continue to deteriorate in which case, new trade ideas will be thrown out fast and furious.

The 5 min charts are pretty negative for Index futures (not talking about the averages' 5 min charts as above)...

Russell 2000 Futures 5 min. The 7 min are the demarcation line where they are neutral and 15 min and beyond (Index Futures) are negative as in the probabilities for short term movement's resolution.

Additionally the 1 min $USD is in a negative divergence and the 1 min Yen is in a positive divergence suggesting the USD/JPY which ramped up on EUR/USD's weakness will soon see downside.

I'll check back in after the opening indications become clear, but I'd look for some early weakness sometime this morning and we'll see where the issue of the 5 min market averages' goes.

Have a great day!