Leading Indicators

I know the market is moving down, most of us have puts and shorts, we want to enter new ones in to price strength, the F_O_M_C knee-jerk might do that for us, although my gut feeling is not great with no presser after and I'm taking the dramamine now an hour in advance of having to turn on CNBC for the F_E_D policy statement.

OK, I've been showing you these for a while, they have looked so bad that I think most people dismiss them as being wrong, I don't think they are, I think the move from March of 2009 is a sugar high, a house of cards built on shifting sands, I believe these indications are true because we quite simply have never been in a similar situation with the world so connected in every way, but especially economically and financially and we have never had such a horrible depression, jobless non-recovery with unprecedented F_E_D and government actions which DO HAVE TO BE UN-WOUND-THAT'S THE PAINFUL PART (e.g. 2000 & 2007).


*Please remember that the majooority of the time we have a F_E_D or F_O_M_C event, we get the decietful "knee-jerk" reaction. For newer members, go to the archives and look for F_E_D/F_O_M_C days and you will see I warn of this reaction that is almost ALWAYS wrong so you don't get caught in a very strong, emotional move that is going to fail a strong majority of the time.

Also, while fear is more powerful than greed (hard to believe I know), please don't get caught up in greed, we purposefully try to get in position earlier than anyone else, we try to do it as price is moving the opposite of our intended trade because we get better entries, better rates and have lower risk, just remember WE LET TRADES COME TO US, be patient if things go south quickly, be patient if they go north, that's a gift and remember we have the ECB tomorrow-theere's a chance the F_O_M_C and ECB act in concert, they did in November of 2011 with several other CBs.

*Leading Indicators are always compared to the SPX in green unless otherwise noted below the chart.

LI's in no particular order...

 Commodities FELL out big time with the SPX today, they had already been negatively divergent at yesterday's "NEW CLOSING HIGH..sarc.", but this is bad and considering the dollar, extra bad.

 Longer term, this is a massive dislocation between the two risk assets that use to move together.

Commodities vs. the $USD, note at the green arrow we have the normal inverse relationship, at the red arrow commodities are falling despite favorable conditions with the $USD falling, even today.

 This is the longer term view of our Sentiment Indicator, FCT, it has been severely disconnected for a while, but zoomed in recently it has been in line. Today it dropped very hard (in red) vs the SPX, the sentiment is RISK OFF.

However we always want to be careful we are not part of some Wall Street last minute trap, we want to use those to our advantage.

Yields are like a magnet for the SPX, over the last few days, not good. Today...HORRIBLE.

The long term view has a HUGE dislocation, these are some of the biggest dislocations I have ever seen.

Currencies, the normally supportive $AUD fell out hard today-market negative

 Longer term, there's a significant divergence in effect, more than enough to count toward a sharp reversal.

 Euro is favorable today, not helping the market much though.

 Longer term, the Euro has been SEVERELY dislocated from the SPX since the EXACT SAME TIME AS MY TREND CHANNEL CALLED A STOP OUT AND BREADTH INDICATORS FELL SHARPLY.

 The Yen 1 min is showing it's normal correlation with the market, I fear that the market may be following the Yen more than the Yen following the market, this was the gist of my 2 part series, Currency Crisis, the Yen is the ultimate Black Swan and few people have any idea. I even showed you yesterday the market's noon-ish highs correlated with a reversal in the Yen.

Yen falling longer term is market positive, look at the recent behavior, this is what I predicted 4 weeks ago in the Yen.

 $USD intraday and the market is in line with the $USD today after having ignored it most of the year.

This was also in "Currency Crisis", the large "W" bottom in the Dollar and why I think the Dollar could sky-rocket from here, sending all risk assets sharply lower.

 HY Credit (HYG) finally has a sharp leading nergative divergence and all in half a day .

The white arrow is them using HYG to effect a bounce in the market this morning.

 Look at the same within the trend to get an idea of how sharp this half day move has been. I do think there could be a sharper, more defined negative divergence in HYG before we see a really strong reversal, but I could be wring, it's just usually Credit Leads.

Junk Credit with an even worse divergence today after having been very supportive as they manipulated the market higher.

 TLT should have a mirror opposite relationship, the last 2-days it was used to move the market higher, then yesterday demand for safety overwhelmed the manipulators.

 Long Term TLT has the normal relationship in green, at white it is seeing demand for safety

VXX as mentioned found support instead of moving lower as the market moved higher as the correlation suggests, again there was demand for protection as the VIX futures were bid up.

Finally here's today's sector rotation, mostly a flight in to safety of Utilities, Staples and Healthcare.