Careful Now

Obviously I don’t have a crystal ball but IMNSHO today’s tape smells like a rat, and not a stainless steel one. In particular I’m referring to a growing divergence between the spoos and the AUD/JPY:

As you can see the AUD/JPY is down for the day while the spoos have been riding higher all afternoon, putting the spoos in the green for the day (for now).

Short term – same picture. Although the AUD/JPY was tracing along during the NYSE session it started to drop ahead of the spoos. Now, we are far from VWAP and if you’ve been long since the morning lows start either taking profits or start setting your stops (in case you haven’t already done so).

My Net-Lines chart shows resistance at the 25-day upper BB line – may be good for a retest of that 1277.5 NLBL we touched on the 3rd.

Making things a bit more complicated is the AUD/JPY Net-Lines chart. Earlier this morning (while we yanks were all sleeping) it tested that lower support line again and bounced back. I hope some of you Euro traders caught that one.

The progress since the lows has been mostly during the NYSE session. So, we have support holding on the AUD/JPY (for now) and we are running into resistance looming ahead on the spoos. On a medium term basis the AUD/JPY is limping behind the spoos a little and that gives me pause.

Same with copper by the way – it’s resembling the AUD/JPY and not the equities side. So in essence this tape smells like ass and I do not see a good edge here. Treat carefully – it’s easy to get whipsawed in conditions like this.

Cheers,