Credit/Risk basket and the Euro

There aren't too many changes today, but the ones that are apparent speak to the oversold (1-day oversold) bounce we are seeing and again it seems to be Euro based as the Euro itself pulled the much dreaded parabolic drop yesterday.

 Here's that vertical drop, I always tell you that these make me nervous and while it just crushed small caps yesterday, we also saw the signs of a bounce that was largely in my opinion, due to the nature of the move in the Euro, especially considering that everything that has happened in the market the last week or two has been Euro based.

 Here commodities are not responding to strength in the Euro and keep selling off, I would look to China and imagine that within the next week we will here some more bad news out of China. We originally were first to the gate on China before any of their horrible PMI numbers came out and that was 100% because of the action in commodities that led me to believe a slow down in China was becoming a real problem.

 High Yield Credit continues to trend lower, if this were a serious bounce, credit would at least keep pace with the market.

 Rates have diverged sharply today from the market and remember yields are like a magnet for the market, there will be dislocations, but eventually the market will gravitate toward yields.

 Even the Euro itself is lagging the market a bit, although we have seen some recent strength today in the Euro. The Euro and the market (Euro being a proxy for the inverse market / $USD relationship) usually track together.

 3C has shown several positive divergences in the Euro that led to bumps up and we see one from yesterday, this is why I say this move is largely FX based.

Here's the 1 min chart for the Euro, still looking like the Euro will gain more ground, it may even test the $1.30 level, but this will be one of the charts I'l be paying attention to, when it goes negative, I'll likely put back on the other half of the BAC position I exited this morning and there will probably be some other nice shorts that are ripe as well.