Market Update

I believe the Euro is moving on 2 things, 1) the volatility shakeout after $1.30 was broken in the wee hours of the morning and 2) the announcement that the ECB is in some way, getting involved in a Greek Bond swap, but that story is VERY unclear as it mentions the ECB would distribute profits from its GBG (Greek bond) holdings to national EU Central banks. The problem that has everyone scathing their heads is the question, "Where exactly are the profits coming from" given this chart of GBG trade...

Thanks to Peter Tchir for the Bloomberg terminal chart...

And as you might suspect, the ECB, when asked about this 'newest rumor", declined to comment.

It's clear that the market is moving strictly on the EUR correlation and nothing much else..

Today's intraday trade between the Euro and SPX.

As for the Euro itself...

The early parabolic move has only intensified and parabolic moves tend to end badly in the same fashion they went up.

As for the market averages...

 The DIA is not confirming, so it looks like algos and dumb money/momentum chasers.

 The Q's have a possible negative divergence developing

The SPY hasn't confirmed either and is leading negative with a recent move down as well.

So the question of the market intraday really boils down to what is the Euro likely to do.

Here's FXE...

 The recent sideways action is seeing a leading negative divergence.

The next timeframe is seeing that weakness bleed over.

ES is also negative, both longer term relative and leading...

It's still early in the day considering most of the important action won't come until after 2 p.m. and increasingly in to the close.

 High Yield Credit went up a bit, but is not willing to go any further and has declined since.

 Financials did come in to rotation a bit, but still lagging far behind.

 High Yield Corporate Credit is similar to high yield, there was a little upside, but it refuses to go any further and is under-performing significantly on a relative basis as measured by the white trendline on the SPX.

Sectors have seen some change from early this a.m., financials are doing better, tech really hasn't moved much at all. The other sectors doing better are doing so because of the FX correlation to a weak dollar (strong Euro) such as Energy and Basic Materials. Industrials have declined a bit and discretionary (as mentioned earlier hasn't moved up or down in weeks) is continuing its downward slide.