Context

For the second day, the market has under performed the implied FX correlation...

 However, we saw the same thing on the way up, except the market ignored the correlation, I am not in the crowd that thinks the correlation is broken, I believe it will revert to the mean. That means the longer term implications have to be considered, the market intraday is below the Euro, but way overvalued vs the FX arbitrage and therefore is actually still outperforming the Euro even as it falls.

Take a look at the long term chart below and how far the market has on the downside before reverting to the mean... We also have to consider, just as it overshot on the way up, it is equally or even more likely it will overshoot on the way down.

Below, it's the exact same situation with commodities, the market is underperforming them for a second day.

However, longer term, the market has a lot of downside before reverting to the mean of these two risk assets that typically move together.

Here I compare commodities with the Euro/USD and you can see they are following the pair's cue.

Sector rotation...

Financials, Energy, Discretionary and Basic Materials are rotating out, Technology (the strength in the Q's) is still maintaining, but not in strong rotation. The defensive groups are rotating in (we saw these groups cresting yesterday so it's no surprise they look as they do today-once again it is the small things that matter); Utilities, Healthcare, Staples and Industrials (most likely a flight to quality) are rotating in, although Industrials could crack.