Risk Asset Layout Update

The ES CONTEXT model has continued to improve, looking at our own set of indicators, I can see why, it not only feels but looks like something is up.

 CONTEXT ES still very strong...

 Commodities again today are showing better relative performance vs the SPX

 The trend in commodities vs the SPX, note the  divergence in red and how much gibber this positive divergence is in white

 Commodities vs. the Euro-I have been asking just about all week, "Is there something going on in the currency pair ER/USD that we don't know about yet?", it appears there is.

 Interestingly yields gave out intraday as the SPX was making intraday highs, this is before FB started trading.

 The longer term trend in Yields since they went negative at the 10th has been positive, yields have been an excellent leading indicator and this is one of the largest positive or negative divergences I have seen (except when looking at longer timeframes).

 Here's the 3 day trend in Energy vs the SPX's relative momentum...

 Intraday financials gave out near the SPX's morning highs, since they have jumped back in line.

 XLF's trend over the last 2 days, very weak yesterday but coming in line today, even slightly leading the SPX

 Tech intraday gave out also just before the SPX morning highs, they've jumped back in line.

 The longer term Tech vs SPX since the May 1 top when they clearly went out of rotation, we saw that top developing fast on May 1, recently though this is one of the bigger positive divergences in Tech. As you know, I consider Tech, Energy and Financials to be crucial to any market bounce attempt and again it appears something is up, these indicators have served us well since we started using them as leading indicators.

 High Yield Credit dropped a bit in to this morning's SPX highs, I'm not sure if this was a reaction in the SPX to European trade in FB before it opened in the US, I can't compare.

 High Yield Corp. Credit looks to be shaping up a bit, it held up better than the SPX today as it didn't make a lower low.

 EUR/USD

 Looking at the trend in the EUR/USD you' think the market would look a lot better, I assume it' either FaceBook or op-ex, but the movement in the pair is looking better and more supportive of a market move higher before we make a significant leg lower.

 This is the rough area where the Euro will need to break through to start creating ome short covering activity and get momentum moving.

 The longer term view, there's a definitive change in character in the Euro, we saw this in 3C early in the week before the changes in price occurred.

 Intraday the Euro has held up better than the SPX, compare relative price levels

 And the trend in momentum vs the SPX is accelerating.

 As far as sector rotation today, the defensive sectors bumped up when you'd expect, as the SPX dropped in to the red, however financials are starting to rotate in, Industrials, Discretionary and Tech, Basic Materials and Energy are holding their own.

Looking since about this time yesterday, Financials fell off early today as seen above, but are starting to come back, the Defensive trades are holding their own, Utilities looks as it should, Healthcare is a bit more shaky. Energy looks impressive as do Basic Material, Industrials, Tech is clawing its way up and Discretionary is holding its own.

There are some strong signals here, stronger than we usually see. I still believe something is brewing and not just a corrective move.