Risk Assets Update

The market was getting ugly with the intraday momentum and now we are seeing the failure. Does Wall Street step in on more time to support it? It seems to me it's less effective and less worth the expense as most of the assets/trades we have been watching have already done what they set out to do, but you never know. I'm sure some of you are questioning, as am I, "is this the start of the break?" It's difficult to say because we've been in the danger zone for a while, but as I just posted, I have no problem adding to some shorts here like I did with PCLN minutes ago.

 CONTEXT continues to deteriorate from a supportive position early in the week to a negative position now which is getting worse, the underlying derivatives and assets in CONTEXT are likely the headwinds I mentioned.

 Commodities are moving in line, but they are negative, not as willing to price higher.

 HY credit was the cheap way to play the bounce, it started selling off yesterday and continues today, this is common at the end of a bounce.

 Yields are HUGELY negative, the market tends to revert to where yields are so this is one very bearish signal.

 A longer term look, before on previous bounces they simply started selling off earlier than the market, this time they didn't even participate.

 There's a little pressure from $AUD as it rounds over intraday.

 There's also a little pressure from the Euro as it didn't move higher with the SPX and seems to have topped first.

 In the mid term the Euro was supportive in the white box, now both have met at the mean.

 Here'a what gave the DIA that lift and the market with it, a dip in the $USD.

 High Yield Corp Credit has stayed with the SPX for longer than usual, but it was also making an upside shakeout of the shorts, this is the first time in the last week or so that Corp. Credit has given a clear negative -sell-off signal.

 You can actually trace the downtrend channel in Corp. Credit and see that it broke above the upper channel in a shakeout of shorts, it looks like that move is ending and HY Corp. Credit will make the next lower low.

Sector rotation is poor today, Financial, Energy, Tech are all weaker, only Industrials and Discretionary are in rotation with defensive sectors looking like they are ready to roll back in.