The Risk Assets are showing a mixed picture. I found it a little amusing how worked up the talking heads were yesterday, "The biggest two day gain since....", etc. However the truth of the market is it is very weak, volatility is what caused the move to be so large, as we suspected since before the move began.
The Risk Asset Layout is reflecting that, but it is also looking like it is not quite sold on this being the end of the move up, neither am I. If there ever was a time to phase in to short positions, this move would be it.
High Yield Credit hasn't really sold off with the market as of yet, I would expect HY Credit to sell off before equities before this is all said and done.
Yields are plunging and that is a sign of the weakness in the market, despite yesterday's gains.
FXA started to show a small negative divergence with the market yesterday, thus far it is in line this morning.
We are seeing a strong move in the dollar, shown here with the Euro dropping, this is putting early pressure on the market, much like Wednesday.
And here is the dollar strength this morning vs the SPX. Typically after the EU close or after 12 pm the dollar weakens a bit and that's when we tend to see the market put in most of it's gains intraday (not including a.m. gaps).
High Yield Corporate Credit still looks supportive of the market making further gains as it has not sold off yet.
Sector wise, Financials are starting to show a little better relative momentum vs the SPX.
ES too has put in a small positive divergence, sort of like what we saw late Wednesday.
My gut feeling that AAPL would diverge with the market has held up every day thus far, this I believe is one of the keys to a real reversal.
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