Market Update

It looks like the market wants to hang at this support level a bit longer, we'll see into the close.

Context continus to move lower, I'm going to pull up our indicators and see what credit is doing.

That was obvious support

Stops just got handed it to them, why they keep putting stops at intraday support is beyond me...

Note the pick up in volume as the stops were hit by a few cents.

Intraday Update

We're still sitting at some support, for the Q's it's right at the unchanged mark.

 DIA 1 min keeps moving lower

 2 min is also leading negative, in several ways.

Here's the SPY 1 min with the last bounce and a move toward leading lower.

The Context model is also leaking lower, much lower then ES as credit starts to sell off more aggressively.

Intraday update

It looks like that last intraday bounce is about to fail ....

Market Update

So far the market is rolling in a "U" as I kind of suspected, we may see an intraday bounce as the 1 min has a positive divergence, then again it's a 1 min chart and with momentum it may be rolled over, but I wanted you to know about it..

 SPY 1 min intraday trade

DIA 1 min intraday trade.

Early Update

The early action thus far looks a bit dismal, ES is leading negative as are the averages in almost all cases.

The confirmation candle I mentioned earlier and displayed, looks like it has a good chance of materializing.

 DIA 1 min close up of this morning's action, actually we can see several days of leading lower, I think I count only 1 short term positive divergence in this series.

 The two min chart which still has not confirmed and this morning has a negative divergence near the morning highs.

 The 5 min chart is leading negative.

 The 15 min chart is a disaster and one of several charts that have given me the confidence to hold and add to my shorts in the MP.

 Close up of this morning's 1 min QQQ negative at the a.m. highs and looking like the market wants to roll over in a "U" shaped pattern.

 The 2 min is not only not in confirmation and leading negative, but moving lower as well.

 Close up zoom of the 2 min QQQ

 The 5 min is leading lower.

 The 15 min is negatively divergent in the Q's

 And the hourly chart gives you the big picture from the July crash lower until now at leading lows well below the Aug/October lows.

 SPY close up 1 min of this morning.

 The 2 min is leading negative very badly and moving lower as well on a relative basis.

 The 5 min SPY is leading negative very badly.

As is the 15 min.

The market is just starting to roll on increased volume. I'd be on the lookout for that Harami confirmation today. If that confirmation candle is put in, you may not get a chance to add in this area.

What is Really Going on in Iran

This from the Australian:

All eyes on Israel after second Iranian blast

CLOUDS of smoke billowed above the city of Isfahan - evidence that the latest strike against Iran's alleged nuclear weapons program had hit its target.

Early look at Risk/Credit

 Commodities again this morning not breaking to new highs.

 The wider view showing them being dislocated after initially or originally being strong performers.

 Here's another way to look at the relative performance of commodities vs the S&P over the last 2 days.

And USO vs the SPY (red) over the last 2 days.

 High Yield hasn't been able to break above last weeks highs, the scaling is difficult here, you must compare the Green S&P at last week and see how it has moved vs high yield not having moved at all, a serious disconnect.

 Here's another way of looking at it with the scaling problem. The red trendline extends to last week.

 I said I would figure out how disconnected the Dow is vs the Euro, as of the start of the bounce where they were close to parity until last night's close, the Dow is at least 250 points rich as of last night.

 High Yield Corporate Credit remains dislocated.

Rates haven't broken higher all week, while the S&P has, another dislocation that is difficult to see because of scaling.

The quick and dirty CONTEXT model is leaking lower with ES overall since the 8:30 NFP release.

Globally Coordinated Bailout of Just a Few Days Ago Is Already A Failure

As has been noted recently, the half life of interventions is decreasing and the recent Globally coordinated Central Bank lifeline that was thrown to Europe this week sending stocks flying higher is already seen as a failure as the ECB releases new data today on the deposit facility and marginal lending facility.

From the Wall Street Journal 

Use Of ECB Deposit Facility Again Hits New 2011 High Thursday

Use of the European Central Bank's overnight deposit facility rose Thursday, setting a new high for the year for the second day in a row as tensions in the euro zone's money markets persisted.

Use of the deposit facility, which pays a 0.5% interest rate, rose to EUR313.763 billion, even higher than the EUR304.42 billion recorded the previous day. The ECB data suggest that the recent efforts of central banks around the world to ease market tensions by making emergency U.S. dollar loans cheaper hasn't yet calmed nerves on the euro zone's money market.

The deposit level has been elevated since early August, as banks favor using the ECB as a haven for excess cash rather than lending it to each other, as they remain reluctant to do so on concerns about counterparties' exposure to risky euro-zone sovereign debt.

Meanwhile, banks borrowed EUR8.64 billion from the ECB's overnight lending facility Thursday, which charges a punitive 2% interest rate. The level is higher than the EUR4.638 billion borrowed Wednesday and the highest level of borrowing at the overnight facility since March 1, when banks borrowed EUR15.104 billion from the facility.

When the interbank market works properly, banks use the lending facility to borrow just a few hundred million euros overnight. But many banks are at present forced to turn to the ECB for their short-term funding needs as the debt and banking crisis continues to erode banks' confidence in one another.

In other words, this is updated data since the "bailout" this week, it shows even worse deterioration then before the "bailout this week".  The ECB deposit facility has risen to a multi year high, showing that the intrbank liquidity freeze is worse then it was before the central banks' action this week and most stunningly was that the record usage of the deposit facility went back to March of this year before the Centrals' bank move, a day later it reached multi-year highs as banks seek out protection for their money which would otherwise in a healthy market environment, be lent to other banks at a higher interest rate.

In addition to a $USD dollar shortage, there remains a Euro shortage as the banks borrowing from the ECB's discount window surged from $4.6 to $8.6 billion overnight. In essence the excess cash being parked at the ECB by stronger banks is being borrowed at a 2% interest rate by the weaker banks.

Bottom line, the Central Banks' coordinated move to ease the liquidity crunch in Europe did nothing and only a few days later as we can see by today's updated ECB usage report, the situation has deteriorated faster then anyone expected.

Non-Farm Payrolls Misses, but Unemployment Rate Drops

Here's the particulars including prior, consensus and actual...

As you can see the NFP missed consensus  by 11,000, the hourly earnings month to month dropped -.1% on consensus of a +.2% gain and Private Payrolls missed as well at 140,000 on consensus of 150,000. The curious number is the unemployment rate which dropped from 9% to 8.6%, eemingly good news at first glance.

Here's how the unemployment rate dropped, workforce/labor participation dropped again from 64.2 to 64. With more people leaving the work force, the UE rate looks better, however it is not good news, it's just a function of people giving up on finding work.


The ES reaction...

3C shows a clear negative divergence in pre-market ES and a big volume spike at the highs which have dropped off since, those highs were exactly at 8:30 a.m. when the NFP was released, setting up a potential confirmation candle for the Harami patterns we saw yesterday. On of the most common is a gap up and a close below yesterday's close which is considered to be confirmation of the Harami.


Such a confirmation would look similar to this...

The first two candles are the Harami, the third which I added a little on the top, which would actually be solid green, would be the confirmation candle. When a candle is filled solid green that means it opened at the high point of the body (not including the wick) and closed at the low point, a open candle is the opposite, it opens at the low point of the body and closes at the high point, the first is bearish, the second is bullish.