Risk Assets Update

So far HY Corp Credit is starting to dip, it's not as bad as I would expect to see at a reversal, but that has often changed in a day, it is the one risk asset that is holding up fairly well.

The EUR/USD is still mildly supportive intraday of upside gains, whether the market arbitrage algos take advantage of that or not remains to be seen, but that is still there intraday.On a longer term basis covering about the last week, the EUR/USD is negatively divergent so the longer term bounce theory from April 10th is showing what we would expect to see, intraday there's still room though for some upside.

The $AUD is diverging negatively, it continues to do so, this is what we expected to see toward the end of the bounce and it is there, so that checks out. Intraday it is in line with the SPX, meaning there are no short term indications from $AUD of intraday market strength like seen in the EUR/USD.

Yields have diverged negatively as expected as the bounce moved higher, there is a little bit of an intra day positive divergence that is mildly supportive of intraday upside as the EUR/USD is.

High Yield Credit is where it should be.

The bottom line is when looking at the bounce from April 10th nearly all the indicators are now negatively divergent, meaning we are probably very near the end of the bounce move and a transition to a downside move.

The only issue left to resolve is the very short term timing of exactness and I don't think that can reasonably be settled until we see whether the market chooses to pin the overwhelming number of PUT contracts out there, it would seem it would behove Wall Street to pin those contracts, but as I warned this week, the closer we get to the end of this move, the more "Every person for themselves" attitude the hedge funds will take, "he who sells first, sells best".

As you can see over the last several days, my approach has been to phase in to longer term equity short positions, not options so much, while leaving some room in the risk management to be able to add on any further potential gains that could come as a result of an options pin tomorrow. I'm essentially covering my butt if the pin doesn't come through with exposure, but still leaving enough room to add to that position at better levels.