Friday I left off with the Week Ahead saying,
"So far from what I can see we have positive divergences on 1 min charts in Index futures, we have negative divergences in Index futures on 5 min charts. A 1-day oversold condition usually ends with a move higher the following day, but I suspect we were pinned most of today and the base was late forming so I suspect we'll see some additional upside Monday, maybe a bit longer than that, but I don't think it will be long before we are looking back to the downside".
Since Friday, rhetoric from both Greece and the Eurozone, primarily Germany has heated up and it seems traders have taken a more defensive stance over a Greek exit from the Eurozone, although after having said a Greek exit is manageable over the weekend, a more conciliatory tone was struck today with a German spokesman saying they want to keep Greece in the Euro-zone which is of course nearly meaningless other than to calm nerves a bit. The EUR/USD touched as low as 1.189 this morning before finding some support, essentially a 9 year low that hasn't been seen since the first Greek bailout in 2010. Adding to that is German inflation or rather deflation data with 6 of 6 regions seeing strong deflationary prints, it seems the strongest EU nation is now in a deflationary spiral as well.
USD/JPY also took a bit of an overnight plunge as well to an a.m. low of 119.59. Both the EUR/USD and USD/JPY moves had a lot less to do wit the $USD and more with Euro weakness and Yen strength, however as posted Friday in some near term expectations for EUR/USD. the $USDX is still carrying a substantial negative divergence near term so I do think it's very likely the EUR/USD pair bounces.
As for the Index futures, I suspect they continue a bounce that they lined up a base for late last week on a deep 1-day oversold condition, although there's not much behind them right now, 1 and 5 min charts are in line with price, but just judging from where we left off Friday, I suspect we do see the bounce mentioned above from Friday, short lived as it may be.
We'll be looking for opportunities there and I think I may have an interesting longer term investment idea, something that has been bugging me for weeks looks like a theme for 2015 which may be attractive to longer term investors.
I'll post that in a bit.
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