Leading Indicators Suggest We Are Not Done

A quick look at Leading Indicators, along with the averages, suggests we are not done, however I will maintain all short positions as this market is in too weak of a state to handle any more external shocks like the Chinese tightening earlier this week, plus my big picture/core positions should be aligned with the highest probability resolution, not bouncing back and forth with daily market volatility.

There are still some mixed signals and I suspect they may be traders taking a larger picture approach vs the normal intraday leading indications that have always been effective.

 As suggested in an earlier post, VIX Futures and VIX Short Term Futures (VXX /UVXY) Being Accumulated note the outperformance of VXX (blue)  vs SPX (green), as I have inverted the SPX's price so you can see where the normal correlation would be and today's VXX outperformance which I suspect is due to demand as we saw in the 3C charts across the board.

 Spot VIX is also outperforming the SPX.

These are two signals that suggest the market doesn't hold on much longer before the next leg down.

 To be fair though, my SPX/RUT Ratio Indicator (red) vs te SPX is supportive of higher SPX prices near term, longer term this indicator is negatively dislocated and calling for lower prices, the interpretation would be the continuation of short term market strength followed by a severe decline, which is similar to what I mentioned about the IWM and a head fake move above a range longer than a month and thus, VERY obvious, likely with a number of limit buys or traders willing to buy in breakout confirmation just above it\\the range.

 while mostly red on the day, TLT is also outperforming the SPX today intraday vs the correlation, a Flight to Safety trade,

 HYG which I suspected would be a lever is underperforming the SPX, this makes sense for a short term move as no one wants to be long HYG and get caught without a chair when the music stops.

HYG's near term trend has been negative as well as it's long term trend which is the worst I can recall ever seeing.

Credit tends to lead stocks.

This is HY Credit, also leading the SPX lower, but with a recent, small positive move at the SPX's second low in the "W" bottom.

Here's a closer look

Although intraday credit did lead the SPX lower.

5 year yields are jsut about in line with the SPX, so no interesting indications there.

However the 30 year yield has led the market lower numerous time as a leading indicator. It isn't severely dislocated right now vs the SPX, but it is dislocated.

Here's a closer look

And pro sentiment , as I said, some seem to be taking the same course I am and maintaining shorts no matter what, even on short term bounces or intraday strength.