RISK Layout Update

So far, I like what I see....

 Yields which are leading more often then not, spiked Friday, this would be in line with some of the indications of late Friday that today we would see a better looking bounce as expected last week, but in to weakness. Today Yields have come undone and are negatively divergent with the market, they tend to act like a magnet for equities.

 Although the daily chart shows a severe dislocation, for our purposes of looking at the recent activity, Yields are trending down, they have been divergent at some key areas sending the market lower as it transitions from a solid uptrend to a lateral trend, I believe this is the topping process as tops are almost never "V" shaped, but rather U-shaped.  Right now there's a significant divergence between yields and the SPX in green,

 The $AUD as part of a carry trade and as an excellent leading indicator for the market clearly went negative early last week, leading the market lower and is negatively divergent today as well.

 The more recent longer term shows the $AUD going from a move in sync with the market to a downtrend in the same area the market is in lateral chop. This would also signify that the carry trades used in FX land to purchase stocks are being unwound.

 Here's the Yen, it has an inverse correlation with the market, when it moves up, the Yn carry trade becomes more expensive and is taken off, so this move may look like confirmation, it is in fact a very negative divergence.

 Also note the recent change of trend in the Yen, again, this is not good for the market, traditionally when the Yen spikes or rises, the market sells off so to se it moving up in this area where so many other indicators are confirming the same is good to see as far as confirmation in the market's activity.

 High Yield Corp. Credit I showed you yesterday as having sold off below Thursday's close late Friday, that sell-off has continued, the rule of thumb with the credit markets which are much larger then the equity markets and traded by smart money, is "Credit leads, Equity follows" so in my theory of what to expect in to a market bounce, thus far all is lining up better then I would have imagined.

Here's the longer term trend of HY Corp. Credit, note the down trend in effect and as the SPX breaks resistance, HYG is going in the opposite direction and just broke support!