Market Update

The market has taken an interesting twist, if not deceptive. Breadth since the open which was strong has fallen off to pretty weak levels. You may recall in this morning's first post the 5 min $USD negative divergence and the 5 min Yen positive divergence which if triggered, would send USD/JPY lower, but I wasn't quite sure if that was a transitory divergence or already the start of deterioration in a very early/young bounce. I think we have our answer and it's probably important you see this so you don't pull any triggers too soon.
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The 5 min FX divergences have moved to the 1 min charts which means they are about to trigger...

 $USDX 1 min neg.

Yen 1 min positive which has resulted in...

 a clear USD/JPY 1 min negative suggesting it and likely index futures pullback, which is something I was expecting this morning in the first post, but it may be deeper than initially expected.

This may cause people to think, "That's it for the bounce, time to pull the trigger on shorts" and while anything is possible and this is why I'm watching everything so carefully, especially with the minutes (wild card) at 2 p.m., I don't think that will be it for the bounce we have been expecting this week.

 Case in point, almost all risk assets look like this, the QQQ 1 min which is negative and lower prices would not be surprising from here. However...

This 5 min QQQ positive is much bigger, a much stronger chart and it has no deterioration.

The bottom line, it looks like the market is going to see some near term downside that will make this morning's newly formed bounce look like it's over before it even really started and that's a narrative traders will buy in to as we have had the worst 5-days since 2013 and the worst start to the year EVER. 

However, a 5 min positive like this just doesn't pop up from nowhere and these are rarely abandoned once they've reached this stage so I would not buy in to any downside hinting that the early strength in the market was just a passing event, I think this is probably a trap of some sort, perhaps to engage a short squeeze. Thus, I'd be patient here before rushing to any decisions.