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Wednesday, March 9, 2016

Wednesday -- ECB, Overnight Reversal, Failed Trades Are Surging

S&P E-mini Futures:
Up on overnight reversal higher.

Europe is ripping in anticipation of further ECB accommodation on Thursday. Asia was mixed.

Tried to find proof of a supposed sell-off in Japanese JGBs but could not. Did find this, however, and it's weird:

From Bloomberg: "...failed trades are surging [in US treasuries], and may have reached a value as high as $12 billion in recent days. ...When you consider that there were just $132 million of failures in the week ended Feb. 24, there's clearly something very dysfunctional going on in Treasuries to spur a surge in uncompleted transactions."

Something is going on under the surface, and probably has been for many months.

Very slight Risk On tone.

Prices continue to come in with lower volume, yet 2s have retraced much deeper than the rest of the curve which is a subtle indication of inversion (but would have a long way to go before it's an issue).

WTI crude continues to hang in there, and volume is good. Price needs to cooperate. NG continues to bounce too.

Day 3 of gold's failure at 1280.70. Silver getting hit too. Platinum completed a possible five-wave impulse, so it deserves its current pullback. Palladium down, copper up.

S&P Outlook:
The overnight reversal higher in futures comes at a key juncture of price and time.

Mentioned the 1976.60-1978.35 zone as a "cool neighborhood" for a test, which yesterday's 1977.43 low did perfectly.

Based on the wave count shown yesterday, however, below 1968.80 on the cash S&P would start to suggest weirdness. So the time to regain upside traction is now.

As mentioned a few days ago, the next level of Fibonacci confluence is at 2023.47-2027.60 and comprises an important 78.6% retracement, a 1:1 Fib extension, and trend line resistance.

Anything below 1931.81 would suggest a retest of the 1812 lows least.

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