Risk Layout Update

This is an update to the earlier Credit, currencies, etc update; thus far everything looks as it should indicating an intraday bounce, but nothing that is changing underlying sentiment and trade, just the typical wiggles and increased volatility we talked about.

 High Yield Credit is moving to its intraday lows, it is not interested in following the market, so there's a divergence there, where as earlier it looked to be somewhat supportive of an intraday bounce.

 Yields were also somewhat (mildly) supportive of an intraday bounce, since they have diverged with the SPX and are now in a negative position.

 The Euro showing early dollar weakness was one of the main factors that was supportive of an intraday bounce, legacy arbitrage (weak dollar=stronger risk assets). That is starting to taper off. We'll want to keep an eye on USO, although I think it has more to go in the near term, but  stronger dollar will pressure almost all risk assets, especially oil.

 The $USD's early weakness was supportive of an intraday bounce and probably part of the reason we saw some positive divergences on the short timeframes in 3C on the averages. The dollar seems to be leveling out.

 HY Corp. Credit is also not willing to follow the SPX/Market as a risk asset, again, the credit markets are much bigger and much more informed then the equity markets.

 From Thursday through today, the relative performance of the major Industry groups vs the SPX, you can see financials have fallen out of bed from Thursday's action. The safe haven assets are more in rotation vs. Thursday, Utilities, HealthCare, Staples. Energy hasn't seen that big of a change and this may be supportive of the USO trade from today. Basic Materials have fallen off, as well as Industrials. Discretionary is relatively unchanged, Tech is surprisingly strong.

Looking at this afternoon only, Financials are showing better relative performance (thus closing FAZ and looking for a better entry), Energy is looking better as the day moves on as are industrials. Tech and Discretionary seem to have lost momentum and as you would expect on some risk on mood intraday, the safe haven sectors are declining this afternoon.

All in all, no surprises really except the strength in Tech since Thursday and more recently it seeming to lose some momentum.