Tues, Feb 9, 16
08:45 ET Update: [Stockboardasset] S&P futures -56bps
08:45 ET Update: [Stockboardasset] Nikkei –500bps Hang Seng Closed
08:45 ET Update: [Stockboardasset]FTSE100 -50bps DAX -100bps
Today’s the 305th day of a sustained global equity rout. The 111th day of a descending contracting wedge, with an APEX 2-10-16. Notable for a reversal, the global equity index remains below the wedge under pressure due to WTI. WTI coefficient correlation to global equities has increased this week as the China Lunar New Year continues. Despite most Asian markets closed for the week, JPN225 manages to crash in the overnight, as Europe remains flat. US Futures remains flat with the highly correlated WTI up marginally. Logistical companies such as Trucking have seen a +1500bps move in FY’16, but remain in focus as Google trends signals the keyword “recession” spiked to Oct’12 highs.
Global Equities Correlation Coefficient (Daily)
(ALERT-> Dramatic INCREASE in correlation from prior session.)
- CL .59
SPX500 Correlation Coefficient (300min)
(ALERT-> Dramatic decrease in correlation from prior session.)
- CL .95
- USDJPY .84
- HKG33 0
- JPN225 .88
- DX .15
- GC .-.92
Overnight, our Asian Counterparts in Japan (POST NIRP) had a rotten day for the index. The Yen Strengthen as the global economy comes under pressure causing panic. JPN225 closes -540bps at 16,085. JPN225 risks downside imbalance as Post NIRP has taken the market on a roller coaster of drive, rejection, and back to support of Mid-Jan. The Point of Control on watch is 17125 currently the index is in distribution to the downside, but knowing Haruhiko Kuroda, his statements could cause an unfair level with reversion. Morgan Stanley: BOJ could ease before July. USDJPY similar drop back like JPN225. USDJPY
POC 117.725 has a current downside imbalance trying to produce an unfair low in the 114s for a reversion. Japan runs for the exit as post NIRP is working just great.
Over to the laughing stock of the World—China. The Lunar New Year is in 2d. The data released prior weekend has depicted a fall in China’s FX reserves leaves us with 2 questions:
- How far will china go?
- Where does it end?
USDJPY Correlation coefficient to SPX of .84 on a 300min scale. Post NIRP bulls are under heavy pressure after the multi day bracket 116.50 has ended in a downside imbalance. USDJPY POC 119.85 on data heading back to FY’14. The current downside imbalance is high-risk probability of continuing due to low volume nodes. Kuroda/BOJ have verbal firepower to revert trend to POC, but high volume nodes aren’t present until 103.
EURUSD Deserves a watch due to the inverse nature of the USD. On a 300min, dating back to Dec’15 Start. Price has rotated 1.08712POC in a tight bracket with an imbalance to the upside continuing. USD Linked futures will benefit.
CADUSD vs. USDCAD Crossover depicts risk on in CADUSD, which will add favorable bulls to WTI. The spread of CADUSD vs. USDCAD remains in an ascending slope = risk on.
US ECON DATA Release
6:00 AM ET
8:55 AM ET
10:00 AM ET
10:00 AM ET
11:30 AM ET
1:00 PM ET
4:30 PM ET
(High Timeframe Playing Field)
We are on the 758th day of the balance. Parameters: SPX500- VAH-2060, VAL-1873, & POC 1935. The balance area has generated a bi modal distribution where price sits on the lower distribution hovering on the point of control. If there is a strong imbalance to the upside, expect a migration to the upper distribution 2050-2010 range. If a weak imbalance, price will remain rotating lower distribution until market generated information generates a new thesis of market imbalancing. (US Recession) This balance area is a structured sell zone of 1.618 extension from the start of the bull cycle. Over the 758 days, price has rotated violently producing not just the balance area, but 2 major primary wave functions. First, 5-20-15 primary 3 wave ended giving way to 8-24-15 crash in wave count 4. Now, we wait for wave count 5 up-thrust or thwarted 5th wave.
Interesting to note, as the 758 days of rotations of the current balance area, we start to visualize an ascending triangle start date 1-8-14 and end date 1Q’17 (APEX). Supply line of the ascending triangle 2090 where the 1.618ext from start of bull cycle resides around. This is a structured sell zone where funds have met targets to sell. I.e., why we see the rotations of the balance area. When price migrates to the upper distribution of the bi modal, selling is very abundant and rotates price to the lower distribution. This action develops the internals of the ascending triangle. The demand line of the ascending triangle started 1-8-14 and has a 22-degree slope. Price has migrated to the demand line on 4 separate occasions. 2 of the occasions were the notable treasury flash crash, and 8-24-15. Current Price sits below the demand line which is concerning. The Geometrical Structure has a high probable of an upside break, and our PT on upside 250 using measured rule. The upside break would generate the 5th primary wave count. We do have to account for downside imbalances, which is why we watch the LVA . Current price resides in LVA, so downside imbalances are still on alert. Our PT on downside is 1700-1750. Best guide to gain the highest probability of an imbalance is to monitor Balance area.
Yesterday was the Rush to the exits in DAX/FTSE100, today is the JPN225. We note the high correlation of WTI to global markets as WTI stable in low 30handle. Chatter of BOJ easing from MS. US Rate Hike diminishing odds. EURUSD vs. USD breakout. No major option expire in US. Yellen opens here trap this week. Logistical companies will be US Leading Indictor of recession. Google Trends keyword recession spikes to Oct’12 highs. Iran tells Russia it’ll increase market share. Turkey could invade Syria. IEA says chance of OPEC/Non-OPEC meeting low. EU Equities remain steady. US Futures Flat. Another volatile day in the trading pit. https://www.youtube.com/watch?v=eFTLKWw542g
- Tail Risk outliers today- 182 (1.272ext) & 189.50POC
- Downside risk 184.36,182.78
- Upside risk 186.15, 186.70, 187, 188,
- Typical Market Auctions in this bracket are Open Drives, Open Drive Test, and or Open Rejection Reverse. 186-187 window wide open. WTI is highly correlated to intra day price action US Equities. If Energy is controlled, equities will imbalance upside.