The Bigger Picture

Once again , as we did at the SPX's tag of the 150 day moving average, we forecast a bounce at the 200-day moving average, incidentally we forecast all of this to happen on April 2nd with a head fake higher first which occurred, that head fake failing (SPX) which occurred in May and on the way down, speed bumps at the major moving averages such as the 200-day that would create speed bumps/bounces, but nothing that would change the ultimate forecast of the October 2014 lows being breached, a new lower low being put in and the market transitioning from a stage 3 top to stage 4 decline which in primary trend terms is known a a bear market even though 1/3rd of all professional traders on Wall St. have never seen one! This would be my third bear market and as a student of the market going back hundreds of years to different asset bubbles and back to the 29320's, the 1929 crash and great depression, it has been my opinion in comparing charts from then and now, that this is much worse and if you are on the right side of the trade, the best and biggest opportunity of multiple generations.

While that's the bigger picture analysis, we have to take the market as it comes and the opportunities with it so we also keep an eye on the near term. Yesterday I posted what was noe something I could no longer just say, "This looks bad", the USD/JPY charts and component currency charts as well as the EUR/USD. The USD/JPY as seen yesterday and today is moving up or has been moving up as a carry trade supporting the bounce off the SPX 200, the EUR//USD has been moving down. Yesterday's FX-Market Correlation / Divergence were a sampling of the charts that would no longer be ignored and the charts I could no longer just tell you, "It looks bad". 


The USD/JPY was anticipated to move lower and the EUR/USD was anticipated to move higher as of the post above yesterday.

AS OF TODAY, THE $USD IN BOTH FX PAIRS IS AT THE BIGGEST DECLINE IN 7 WEEKS, THE EURO WHICH IS UP 1.3% IS AT THE BIGGEST GAIN IN 7 WEEKS, SO YESTERDAY'S POST WAS NOT ONLY CORRECT, BUT INCREDIBLY TIMELY.

And why does it matter what FX trades are going to do for equity traders? As I said yesterday, it's like knowing there's something around the corner by seeing the shadow, the FX pairs effect the market which was updated as well in, Index Futures yesterday just to round it all out.

Today's move in the USD/JPY (beyond the 1% loss or biggest loss on 7 weeks for the $USD) has had this effect on the Index futures (ES/SPX futures), again the shadow telling us there's something around the corner.

Yesterday the posting of the exact same chart, USD/JPY vs ES has the exact same near perfect correlation, the only different is today the USD/JPY's decline forecast last week, and especially yesterday has taken place and as expected, pulled SPX futures down with it.

As for the EUR/USD which I also saw as reversing trend, but to the  upside looks more like this...

EUR/USD downtrend sees a big reversal to the upside today, in both cases of USD/JPY decline and EUR/USD advance, the $USD has made the biggest move down in 7 weeks (the Euro the biggest move up in 6 weeks).

S it only seems reasonable to take a look at the short term charts of the FX pairs and see what we might have in store very near term. However that's only for positioning of new trade ideas and trade management, I think the big picture is pretty well in hand as the market has moved almost exactly as forecasted on April 2nd; that's a lot of advance notice.

Before I update too many more individual assets, I want to get a better feel for the major market near term as it will have the most effect on individual assets and the best timing for their entries. This won't be a large post like yesterday, but I think a smart one to take note of for near term trade and positioning.