What I'm watching in the IWM

I mentioned earlier that I was watching the IWM closely, here's what I'm watching and so far it's moving in the right direction.

Today's trade is obviously very choppy, but the iWM made that high above local resistance that I was talking about yesterday during the day and in the nightly wrap, if it were another average it might not be as important, but the IWM should always be the leader of a risk on move.


When there are a series of shorter term, even intraday divergences and they disappear, it doesn't mean they didn't have an effect, it's accrual. It would be like you making a series of small deposits in a savings account, although each is nothing big, the series of them accrues in to a larger sum, it is often the same with distribution and accumulation because of the size of their orders, they often break them up in to smaller orders and if there's a trend among the small divergences it can show up on the longer term charts just as your bank account's balance would show a large amount despite the small deposit you were making that day.

So we'll start from the long charts, the balance or accrual area for the IWM and work toward the middle timeframes.

 This is the 60 min chart, one of the most important, highest probabilities and cleanest underlying trend, also one of the strongest signals and here we show accrual of divergences, especially recently as the 60 min is leading negative off only a very small positive divergence to send it higher, not enough to be an accumulation zone for a big upside move.

 We have the same on the 30 min chart, it shows more detail and both tops negative, but like the 60 min, this most recent move to the upside is leading negative much deeper.

 The 15 min chart under less extreme market scenarios is the swing chart where many turns occur, four our purposes though we are just looking for a leading negative divergence which helps confirm the above charts.

 The 10 min is shorter and therefore more detail and sharper, it too is leading negative. Now we will start from the fastest charts and work toward meeting the 10 min chart. This is what I have been watching.

 The intraday 2 min chart went negative at the highs of today and then leading negative, i want to see this divergence migrate to the next longest timeframe.

 On the 3 min chart we have the same, as the IWM hits the intraday highs, distribution sets in and it is leading negative, now only the 5 min charts stands between connecting the intraday divergences and the long term divergneces.

 And the migration of the neg. divergence is now on the 5 min chart, leading negative. The worse it gets the better.

As for our intraday momentum, it's starting to look "not so good too"

Yen

It is too early to get spend too much time on the Yen at this moment, but suffice it to say, I see a few things that suggest the Yen made a parabolic move this a.m. and it may be ready to reverse, this would also hold a lot of importance for the market as well. I see a hiccup in the AUD/JPY, EUR/JPY and USD/JPY while the AUD/JPY is a little different, there's not much movement in the $USD or EUR on their own, so the Yen looks to be the potential mover in the pairs, that would be Yen strengthening.


For now I'll only post this chart of the intraday YEN futures as to not spend too much time writing when I should be watching.

There are also signs of Euro weakness and improving $USD strength, these all would pressure the market.

Watching the IWM Closely

It's negative in the short term charts, yet has accomplished what I talked about last night as the continuation of yesterday's plan, the short term charts going negative after it has run through the range is significant, it's at a pivotal moment. I'll keep you up to date if this migrates more.

MCP Follow Up Charts

As you know, the Trend Channel moves up with prices to lock in gains so it's not a static stop, if you aren't using the Trend Channel, a 22 bar exponential moving average works fairly close to the trend channel stop for MCP, it's more accurate from 5 to 30 mins, it starts to lag a little at 60 min, but not that much, so that's another option.

 3 min chart is losing a little momentum, it's not really what I'd call negative, just profit taking after a +12% run the last 2 days.

 The 5 min chart is similar.

 At 10 min we are more in line and this would make sense, this is why I view any downside as likely a consolidation, it just depends on how active you are as a trader and what makes sense to you, your schedule, account and position size, etc.

 The 15 min chart looks great here, leading positive.

 As does the 30 min chart.

 The 4 hour chart shows what I think is ultimately the MCP base, a larger "W" base so I think there's good probabilities for higher prices, going by this chart they would be much higher, something around $18 according to the price pattern measuring implications.

 I also like the 50-bar 5 min m.a. for an intraday stop if you are looking to trade around momentum and consolidations.

As for the intraday momentum, we seem to be losing it, 5 min RsI is slightly negative, MACD is as well, but the 50-bar 5 min Stochastics is still embedded.

This is more of a personal preference choice, take profit and try to re-enter at lower prices or just hold, for me I'd rather just hold at this stage until the trend is more developed and likely to see a larger correction that may make more sense (to me) to try to trade around.

MCP Update

MCP has a nice move in it today, as far a a tight intraday stop, the 5 min trend channel would be around $2.40.

There are some nice looking charts that suggest MCP has more in the gas tank, but for today, I think it may be getting pretty close to losing some momentum, depending on whether you want to trade around it or not. I'll follow this post up with a broader update.

This is the 5 min stop.

The others are:
1o min $6.35
15 min $6.30
30 min $6.20
60 min $6.07.

I'll post the 3C charts next. I will probably look at this as more of a longer term position and not trade around it to much, but I do think that can be accomplished, depending on where your P/L and risk are according to your own tolerances.

Stabli-ateee and Italeeee

So far the only thing that seems to have moved the Euro during Draghi's press conference that is wrapping up has been the subject of Italian elections as a referendum regarding austerity measures and being ruled by a Goldmanite. The direction Italy takes obviously has a large effect on what Draghi feels is most important, "Governmental Structural Reforms" which could look very different in Italy with the recent elections, depending on what kind of government come out of all of this.

 The larger picture since the press conference...

The Euro since Italy came up.

There are many other interesting notes, I don't think they are essential to cover right now.

The market is moving or has a lack of movement which is very much in line with the movement in the Euro while the press conference continues.

Fragmentation of the Euro-area market has also been a touchy point, at least as far as the movement of the Euro goes during the press conference.

More to come...

Sorry, I can't help but chuckle after all that has been made of Draghi's favorite word, Price "Sta-bill-ateeee"

Market is transfixed on Draghi

Very little movement as the comments are taken in

Listening to Draghi now-Watching the Euro

The Euro and not so invisible hand

I know we have a couple of FX traders here, yesterday I was harping on my view that the Euro would not be allowed to stay sub< $1.30, sure enough if you too that trade and went long EUR/USD or another EUR long pair, you should be pretty happy this morning as it just crossed $1.31

 This was the Euro under $1.30 yesterday, something I did not think the Germans would allow to stand, although the French were probably pretty excited and hopeful it would stay below $1.30, but in the EU the Germans get their way first and on that note, a pretty much parabolic spike in the Euro.

 Here's the Euro(FXE) vs the SPX... Not much difference so far as far as the market is concerned when it would normally send the market surging with the $USD gapping down as much as it did.

However don't forget the bigger picture, the Euro is still massively dislocated from the normal correlation with the SPX, so maybe it's not so exciting to the market. From my rough estimates the Euro would have to be over $1.36 to even be back near the correlation.

Anyone go long the Euro yesterday?

Overnight

It looks like we are getting that move in futures that was starting yesterday, which I thought would be done by yesterday, unfortunately it got a slow start.

French unemployment hit 11 year highs at 10.6% on the 6th rise in a row.

German factory orders were down -1.9% on an expected rise of +.6%.

The ECB left rate unchanged today.

Initial Claims came in better than expected at 340k from  revised 344k (previous 344k)-that would be seasonally adjusted, non-seasonally adjusted rose at the fastest rate of 2013.

Productivity dropped at the fastest rate since 2008 with unit labor cost rising t the fastest rate in 11 months... hmm.

Seasonally adjusted, that's all I'll say.

The January Trade Deficit shows us December was a fluke, the deficit spiked back to $44.4 billion - it recent long-term average - as exports were $2.2 billion less than December exports of $186.6 billion while January imports were $4.1 billion more than December imports of $224.8 billion.

The EUR/USD just recently popped back above the $1.30 level as suspected.

Futures don't look like anything interesting...yet, that should change soon...

 ES

NQ