The collision of global markets and social mood

Wednesday, July 8, 2015

Wednesday -- Overnight Volatility & Divergences

ES Futures:
Highly volatile. Back almost to yesterday's lows. Opens door to lower lows.

China is a hot mess. Reverberating into commodities (especially metals). It appears soothing words are no match for wounded psychology.

Great article from Reuters (and about time a media source actually said it):

Meanwhile, CNBC this morning had a frank discussion about redistribution and helicopter money (actual cash transfers of $100,000 to citizenry to induce spending) amid a chorus of academics calling for such insanity. Gloom entered the room indirectly, too. A side comment was, "We don't know which crisis to focus on."

Watching Europe which is strongly higher as our futures sell off . . . a significant divergence.

Also, FMOC minutes out today at 2pm.

The story for me today is JPY and it's not good. Notably stronger. A possible warning sign as China continues to crumble.

Now there are fresh highs across the curve 2s - 30s.

WTI crude imploded and is trying to stage a rally. It will need mega volume to right its red ship.

Copper new multi-year lows. Gold & silver remain under pressure, silver a little worse than gold, with the latter trying to rally.

S&P Outlook:
Yesterday's lows occurred with a laundry list of positive divergence from A/Ds, ticks, VIX term structure, and TRIN.

There is still a Fib target at 2037.74 (above 2085.06 will negate) which was nowhere near yesterday's 2044.02 lows.

Viewing yesterday's rally as a five-wave structure with an extended fifth. The action in futures could therefore be a deep second wave correction. If today's decline starts looking impulsive rather than corrective, new lows may be possible. Especially when looking at the ES chart which doesn't look as bullish as the cash.

The bright side is that it is getting harder and harder to view the decline from May highs of 2134.72 as a trend change. Even if the bumpy ride isn't over yet.

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