Market Update

The market is starting to move fast again, but looks set for rotation. 

 The Dow is having a decent day, thus all the large caps like XOM/WMT popping up. This is the resistance area the Dow would need to break to get an effective shakeout and possibly get longs involved, as you can see we are very close.

 The IWM has a longer way to go, I'm not sure it will even matter that much in the end.

 For today, the NASDAQ 100 breaking above the lower resistance line would be a decent achievement.

 The SPX is holding its own, not yet threatening the resistance area that would be the obvious target to run a good shakeout, this is all part of the increased volatility as market structure is very asymmetrical today.

 The $USD weakness, depicted by using the inverse Euro in blue is offering the market quite a bit of room, the Dow has taken advantage of that, the SPX/NDX, not so much yet. Commodities are way off right now from the typical dollar correlation. I read this as trouble in China.

 Credit is holding up fairly well, it's certainly not diverging extremely negatively as we have seen in the past at a turning point which can develop within an hour.

 Yields are lagging, I would expect to see this, weakness in underlying markets, in effect, any bounce has underlying weak character, despite what volatility may come on the upside.

 The $AUD is somewhat supportive of the market moving higher, not to the same degree as dollar weakness after today's European close.

 HY Corp. Credit continues to move higher, this in my view reflects an environment in which the bounce still has breathing room.

 Today's sector rotation has been strong in Industrials (look at the Dow), interestingly the defensive sectors are fading a bit as well as financials.

 In afternoon trade you can see financials fading off more acutely, Industrials are fading, Tech is starting rotation in as well as discretionary, this is a small change thus far, but indicative of a bit of risk appetite and the sector rotation toward Tech.

 Here Financials have held good momentum all day, they are starting to see that peel away.

Tech has been largely lateral, but as Financials start to peel away, Tech is showing some signs of life, not impressive yet, but changes in character lead to changes in trends.

 Short term 2 min DIA is starting to leak off

 The negative divergence starting in the Dow hasn't reached the 5 min chart which is at best in line or trend confirmation, note the difference between the DIA and the Q's coming up.

 QQQ 2 min is starting to fly in a strong leading positive divergence, you can see Tech starting to see price movement from this divergence.

 The 5 min chart has been running up all day and is now in its most solid position in days.

 SPY 2 min is mostly in line.

The 5 min is pretty strong, it still appears Tech will take up leadership shortly.

I'm staying patient here, but I may consider looking at some of the large caps like XOM, which is only $.40 from our initial target area. I am thinking about phasing in to some sectors that start moving out of rotation as that becomes more clear.