Risk Asset Layout Update

Today seemed to go by pretty fast, I wanted to look at this earlier but just didn't have the time.

 The SPX is always the green comparison symbol unless otherwise noted. Commodities vs the SPX, mostly they were in line today, nothing too special, they fell off a bit at the end but I believe that has more to do with Energy or crude specifically.

 A longer term view of the recent lows, of the many leading indicators that are in this layout, commodities were on that were making higher highs/lows as the SPX was still moving down. This layout tends to give excellent divergence signals for timing moves, whether starting or ending.

 This is the same chart as the first, I just added USO in blue, you can see commodities as a whole move more like USO at the end of the day. The EIA Energy report was out today and while crude saw a draw of -.1mn barrels, the real underlying weakness in crude is because inventories of oil are bloated, near the upper range of the limits. This was the first draw in crude since the week of March 16th and demand indications are soft showing slippage both for gasoline, where wholesale supplies are down a year-on-year 4.0 percent, and for distillates where wholesale supplies are down 5.0 percent. Softening demand together with heavy supplies of oil is not a bullish combination.

 This is high yield credit and the one indication that I didn't care for much today, there is the chance that HY credit is being effected because of the JPM whale trade as they try to unwind it, but I have no proof of that. For now, it's a day, we'll see what it looks like tomorrow.

 Longer term at the recent bottom HY Credit was another that started trending up before the SPX.

 Yields which are another favorite leading indicator were in sync intraday all day, that's a good sign.

 Again, at the bottom they were another leading indicator heading higher as the SPX went for the break of the 200 day moving average.

 The $AUD was in sync today as well

 Here the $AUD also was positively divergent at the bottom and is leading now, that may be partly because of the Australian central bank rate cut of 25 basis points whereas many feared it would be 50 bp; the $AUD was strong after the cut. Either way, I'm glad to see it leading rather than lagging or heading the opposite direction.

 The market was pretty much in line with the Euro as well today

 A little longer term view, the Euro also was moving higher Friday as the market was moving lower. Relatively speaking the Euro is leading the SPX in the near term.

 I'm happy to see High Yield Corp. Credit was in line with the SPX, if it had aso slipped like High Yield, I'd be a bit worried.

 Another leading indicator that was moving higher as the SPX was bottoming, it isn't as apparent on this chart as it is on an intraday chart or as I showed you last week, with ROC applied to both, the HYC credit move looked likely based on the slight shift in momentum only visible using ROC.

 This is Energy today, I think we already addressed that situation. Still with a falling dollar it will be hard to keep oil down, even though it may not have the same relative performance as some other groups.

 I had mentioned I thought Financials were coming in to rotation on Monday, Tuesday they did just that, today they were more in line with the SPX.

 Tech slipped a bit today...

 However longer term Tech was not only positively divergence at the SPX bottom, it is leading the SPX so some rotation isn't bothersome to me.

As far as sectors go, you can clearly see today was a risk on day as Utilities, Healthcare and Staples all slid out of rotation, Financials entered rotation yesterday while the defensive sectors trade was still on. Overall Tech has been in rotation, Basic Materials are showing a good trend, Energy really doesn't look that bad, Industrials are starting to rotate back in as well.

All in all, the Risk Asset Layout looks decent, it provided some good confirmation that something was up in the market as everyone was bearish and focussed on the break of the 200 day. As I frequently mention, it's the little things that the crowd misses that give you an edge. I'd much rather know what credit is doing than what everyone knows, "The SPX broke below the 200 day ma.a", which I don't think was entirely market coincidence if you catch my drift.