RISK Layout Update

If I haven't gotten to your email yet it is because the market is moving fast and I need to take care of the group. Just remember that most stocks are market directional, that means if you are looking at a BIDU or PCLN short, thee greatest gravitational pull on price will be first and foremost the market's direction.

 Commodities as a risk asset have completely failed here, this is expected with the China situation, again if I have time FXP is a good ETF to play China in a pinch, remember it is leveraged. The fact commodities have failed here to rally shows this is not a true risk on move, but rather the volatility bounce we have been expecting since April 10th.

Remember earlier in the day I said the CONTEXT Model was broadly supportive of more risk on, and we have seen that, I also said I was waiting for the model to flip, now the model is lower than ES, this is the start of the ES negative divergence

 Credit is no longer in sync with the market, at least not HY, this is another divergence we have been looking for to time the end of the bounce. It looks pretty bad, but as you can see in AAPL today, the market ALWAYS moves in extremes, that's why I don't believe in oversold/overbought.

 Yields are also signaling a negative divergence, remember the concept of regression to the mean.

 The $AUD has been an excellent leading indicator, it is going negative here with the SPX, I have seen smaller divergences turn the market, but this is as I showed a few nights ago, the most volatile move in the market this entire year.

 The $USD is holding up pretty well as can be seen by the Euro leaking off and flat, no longer in sync with the SPX. This is not helpful for the market to move higher, but as you can also see, it is more the cycle Wall St. set up on the 10th that is moving the market as the FX correlation has broken down and the SPX moved higher.

 Finally, HY Corp. Credit is laking off, the divergence isn't horrible at this point, but it can leak off a lot quicker in the last hour of the day.

 Financials as expected yesterday are out of rotation, FAZ would be one leveraged financial short ETF you might consider.

Also as expected, Tech went in to rotation today, you can see it is starting to lose momentum vs the SPX in this area.

I'll try to look at some individual names next.