CPI Movement

Interestingly, not only have several assets I was hoping would move in a certain direction, like Treasuries pulling back so we could enter a TLT long or rather fill out the TLT long started already, actually did move as 3C charts have suggested, but several strange signals (mostly in the $USD) seem to have forecast the hot CPI print this morning at 8:30 as if it was leaked in advance.

Or perhaps Wall Street knows what the F_E_D is going to do (it wouldn't be the first time as we have not only caught divergences showing inside information from the F_E_D, but the F_E_D itself has leaked data up to a day and a half early like when they released the minuted BY EMAIL TO 154 BANKS AND PRIVATE EQUITY FIRMS A DAY AND A HALF EARLY...SINCE WHEN DOES THE F_E_D RELEASE THE MINUTES BY EMAIL TO PRIVATE EQUITY FIRMS?), and this is why we see divergences ahead of time. It only took Goldman Sachs less than 12 hours to run their FRB model to show there's little slack in the economy, giving the F_E_D cover to hike rates, not to mention the BEA's "Seasonal Adjustment of their seasonal adjustment",  just keep massaging the data until they reach that goal seemed number they need!

Here's a look at some of the stranger stuff....

 This is what the $USDX 3 min and 5 min charts looked like yesterday. 

The reversal process for a corrective move lower played out and the corrective move lower came to pass, but I wouldn't have expected a leading positive divergence so quickly yesterday without some reversal process of the corrective move (about half the size of the one in yellow).'

 This 7 min chart of the $USDX shows what was until this morning, a negative 7 min $UDX divergence, which I thought made sense as it would take a little time for the 3 and 5 min $USDX positives to migrate to the 7 min chart, but rather the 7 min chart's 3C signal exploded higher almost instantly and before the CPI print this morning!

 The 15 min $USDX large leading positive divergence always showed us the probabilities were for the $USD to continue higher on its counter trend bounce, but I still expected a bit more of a process.

The $USDX 60 min downtrend and the recent counter trend move which is by far the largest counter trend move of the entire downtrend which is what we expected before it even started. The first 2-days of $USD rally were the strongest 2-day move in the $USD since October of 2011!

Interestingly, something was showing what appeared to be insider knowledge of the CPI print long before it was released this morning at 8:30. For instance the 3 and 5 min $USD positive divergences yesterday or more damning...

This 1 min 3C chart of $USDX overnight and this morning in a HUGE leading positive divergence from 1 a.m. right through the 8:30 a.m. CPI print, it clearly looks like someone knew something as the $USD sky-rocketed higher on the CPI print at 8:30 a.m. to the far right.

 The initial reaction in Index futures was down, that was retraced shortly after the open, but it's also an op-ex max-pain pin day and that means that prices are usually pinned as close as possible to Thursday's close so a move lower as a knee jerk reaction to the $USD gains would not have done at all for the max-pain op-ex pin.

 As you can see, Crude also popped lower on the CPI print and the overnight divergence looks like someone had been selling/short selling crude futures BEFORE the CPI release and then quickly accumulating after the CPI release!

And gold futures which went positive yesterday not only in futures, but GLD, which was the reason we entered the speculative GLD calls for a short term move. Gold fell on the CPI data (moving opposite the $USD as would be expected).

We'll have to follow GLD and see what the signals say.

And Treasury futures (30 year) which I said yesterday that I hoped we would see a pullback so we can enter or fill out the TLT long position in to better prices. 30 year Treasury futures showed a VERY clear negative divergence on this 3 min chart well before the CPI data and decline in Treasury futures, making it look a lot like  SOMEONE WAS SELLING TREASURY FUTURES IN TO HIGHER PRICES, WELL AWARE THAT THE CPI DATA THIS MORNING WOULD SEND TREASURY FUTURES LOWER!

While we have a number of charts to follow to see what we want or need to do, it looks pretty clear to me that there was more than enough 3C data suggesting Wall St. knew the CPI print would run hot (Hawkish for F_E_D policy). The proof is on the charts above. 

THIS IS WHY WE FOLLOW THE UNDERLYING MONEY FLOW. WE AREN'T PRIVY TO LEAKS, BUT WE CAN CERTAINLY SEE WHAT THOSE WHO ARE, ARE DOING.