Quick Market / Leading Indicators Update

As for Leading Indicators, I am not seeing the kind of divergences or signals that suggest any kind of upside move with any kind of staying power, if I were to be correct about an IWM/Russell 2000 head fake/failed breakout above its range leading to a real stage 4 decline (much worse performance than last week's 3 year lows in weekly performance), these are exactly the kind of shoddy signals I'd expect , especially if the move were to also trap the Santa Claus rally longs who believe that this rally is just a formality, that the market never misses it as this could be used to devastating effect as a weapon of Mass Psychology and we are just about at the perfect area in December for such a move to start.

VXX intraday is inline with the SPX correlation, however VIX (spot) with strange intraday volatility is not, it is lagging the SPX which is no surprise once you've looked at the VIX's daily chart.

 VIX vs (inverted) SPX (green) with weaker relative perfromance and odd intraday volatility again.

My custom SPX/RUT Ratio short term is NOT confirming the market lows and supportive of a near term bounce as is my custom VIX term structure which is inverted and giving a short term buy signal which I showed yesterday and about how long such a signal moved the market- not very long or far.

 Here's the same signal on a slightly broader basis, encompassing the timeframe when we first started to see these things suggesting the IWM thesis.

HYG's intraday signal is slightly leading, its 3C charts are positive on the 3, 5 and even the 10 min timeframe, not long divergences, but there and in my view,  in a market like this there's only 1 reason to see positive divergences in HYG- as a ramping lever.

TLT has been leading today, but it is starting to lose its lead over the SPX and of course the TLT charts have negative 3C divergences on 1, 2, 3, 5, and even 10 min now. Again, shorter term in nature and size, but also a typical signal for a ramping lever sending yields higher and they act as a magnet for equity prices.

Speaking of yields, the 5 and 10 year are roughly in line with the longer 30 year lagging because of the outperformance in the bond, but this can change overnight and I almost suspect it will.

Our professional sentiment indicators that have been leading the market to the downside well before last week's move lower (this is why we call them leading indicators), look apathetic today, they are close to in line, but the point is their weeks of pure downside moves are apathetic today, more lateral, a short term change in their character.

High Yield Credit has much better relative performance than it has shown recently and the PIMCO HY fund is nearly perfectly in line with the market.

The SPY 1, 2, and 5 min chart now have positive divergences. The IWM 2, 5 and 10 min charts have positive divergences, this looks to be the strongest and should have the best relative performance vs the other major averages.

The QQQ 1, 2, 3, 5 and 10 min charts have small positive divergences.

The intraday TICK breadth is improving as you can see below.

TICK custom indicator vs SPY.


I see some positive  atempts in Financials and Tech.

XLF 3 min, yet note the size of the current positive next to the former negative

As well the 10 min XLF chart is very negative, I'd want to be VERY careful trying to trade this long, personally I wouldn't.

And the 60 min chart leaves little doubt which direction this will ultimately take once short term head fake moves (which are not certain, but a high probability) are done.

Now I'm going to try to get to individual assets and see if anything looks interesting.