Credit Indicators starting to diverge.

In what is turning out to be excellent confirmation of our new credit/risk basket indicators, they are diverging and in doing so, confirming their usefulness to do what they were designed to do.

 As you can see, all indicators showed early confirmation, cut as with commodities above, they are diverging negatively with the S&P-500 recently this morning. The idea is that these are all risk assets, but credit leads equities, you could say the smarter money is in credit, so knowing what they are doing tells us about the health of the market and gives us excellent timing of entries when the S&P diverges too far away from the credit and other risk related assets, it's the stock market's emotional pendulum effect that we seek to take advantage of, when the market overreacts in an emotional outburst and the risk basket doesn't follow, we know we have a great, high probability entry.

 Here the Euro shows broad confirmation, when broken down this morning, earlier it was more bullish then the S&P and the S&P went higher, now the S&P is over reacting compared to the Euro correlation.

 Financial Momentum indicator is broadly in line, but now showing signs of falling off while the financially heavily weighted S&P diverges higher.

 High Yield Credit moved up, but refuses to follow the S&P higher recently.

 High Yield Corporate Credit is lagging the S&P.

 Here rates initially were more bullish this morning (in white) and now they have started to diverge negatively. All of the indicators are showing the same theme, they are diverging negatively. The inspiration for these specific indicators came from the CONTEXT Model below which puts them all in one basket whereas we can look at each specifically.

I'm happy to see the CONTEXT model is confirming our indicators with the model or risk assets in green, diverging from ED (The S&P-500).