Risk Asset Layout

There are a few interesting developments on these chart.

 First commodities (brown) vs the SPX (green) and the $USD (blue). Note as the dollar weakness as it usually does after the EU close commodities are showing better relative strength, pretty much an arbitrage trade, than the SPX, there's room for the SPX to move higher based on the dollar weakness, commodities are taking advantage of that more than equities, but most of that is in Energy. There's a chance the SPX is being kept a bit lower than the arbitrage correlation for accumulation at lower prices, but that will have to be verified in the next market update.

 Longer term, don't get excited about the SPX, commodities are way out of line on this 60 min chart, again a lot of this is Chinese manufacturing weakness, but that will effect the US markets, especially with today's data showing Germany falling behind.

 I don't know why the CONTEXT ES model is showing such a short timeframe, but the model is higher than ES, suggesting ES has room to move higher.

 While this isn't a screaming positive divergence, High Yield Credit is holding up reasonably well, pretty much still in Friday's range, this is a slight positive in the very near term for the SPX again in green as always.

 Longer term of course there has been huge de leveraging in HY Credit as it hasn't made a higher high since Feb. 6th, "Credit Leads, Equities Follow". The odd thing is the Credit markets want to have nothing to do with a risk on move that Equities had been involved in and HY Credit is an extremely cheap way for mart money to play a risk on move, so the signal since Feb. 6th has been quite accurate as we watch the SPX weakness unfold.

 Yields near term were negative on Friday, they tend to pull stocks toward them, we expected to see the divergence in any market strength in any case, I suspect even if there is a 1 or 2 day risk on bounce, Yields will continue to negatively diverge. There's some slight weakness in Yields intraday.

 The $AUD which has been an excellent leading indicator for the market is almost in perfect sync with the SPX intraday.

 On a 15 min chart, there are several negative divergences in $AUD depicted in red bringing the market lower as carry trades are closed out, however there is some slight positive bias at the white arrow between the SPX and $AUD. I do not think this is indicative of the carry trade being restored, but it may be enough support for the market to continue a few more days  with volatile chop.

 Longer term, $AUD shows a huge negative divergence starting just before the SPX started to top, there should be some reversion to the mean as the SPX breaks down when considering the bigger picture beyond intraday and day to day moves.

 The Euro is also nearly in perfect sync with the SPX intraday.

 Again, there's a longer term negative divergence in the correlation, but near term (and I wouldn't go betting the farm on the SPX as a long), but the Euro does have a relative positive divergence between the two yellow trendlines with the PX.

 The Yen is doing exactly what it should intraday for the most part, the SPX is actually a little stronger here than it should be vs the Yen believe it or not.

 The rise in the Yen is a clear indication of carry trades being closed out, this is a market negative. Whether the BOJ intervenes in the currency or not is anyone's guess, but their interventions have not been effective in the past.

 High Yield Corp. Credit shows a negative divergence right about the time the SPX turned down from the intraday high, Credit here intraday is a bit weaker, but this all changes very quickly.

 Mid term on a 15 min chart, you can see the negative divergence and sell-off in Corp. Credit leading the SPX lower, there is an interesting divergence though in place in the white box where Credit is actually holding up better.

 Longer term, game over. Credit is in a clear down trend, however as pointed out above, tight now, it is holding up better than equities, which is a market positive in the near term, note the relative areas at the white trendlines.

 Financial momentum vs the SPX was horrible Friday, it was very strong earlier today and gave out a little recently, but all in all, this is a slight positive for the market near term.

 Energy looked bad on Friday too, early today it was leading, it has since given up some momentum, at least as of this capture, but still remains supportive.

 Tech was a mess Friday, it is leading just as all of the tech stocks and the QQQ updates have shown, this appears to be where any market strength is coming from, Financials and Energy are helping, but as we saw on Friday, it appeared Tech wants to rotate in.

 Sector rotation since Friday... Energy is the obvious outlier in terms of strength, the Defensive sectors picked up as they should.

In afternoon trade, financials (at least as of this capture) were losing some momentum, the Defensive sectors were also losing momentum, indicative of some risk appetite here? Note Tech especially gaining ground late in the day.