Risk Asset Layout

YEsterday's deterioration in the Risk Asset Layout had me saying, it needs to get back in line and soon, this morning true to CONTEXT and as you will see, 3C, there's improvement.

 High Yield Corp. Credit improved quite a bit on the open and around 10:30, HYC Credit is leading the SPX here, but note the time of the divergence in credit vs the SPX.

 Exactly the same time as we see it in 3C and the market averages, the point being, sophisticated investors are looking at much more than MACD and Stochastics.

 HYC Credit was in line on the 7th, it led on the 8th and part of yesterday early on before dropping, it is moving back toward a leading position and thus the asset is jumping back in line as I warned yesterday, we'd need to see fairly quickly.

 High Yield Credit is where the real damage was done yesterday, it went positively divergent vs the SPX at the same time this morning.

 As you can see, HY Credit still has work to do to get back in line or better, to a leading position, but at least it's moving in the right direction now. I think the lack of planning and the subordination threat from the European Finance Ministers yesterday really spooked the market.

 Yields are also seeing significant improvement today, leading the SPX intraday

 Yields on a bit longer timeframe improving, I added the white trendline so you could make relative comparisons between where yields are and the SPX, yields are looking a lot better and they tend to be an excellent leading indicator.

 Now we see yields moving back in line rather than the threatening posture they had yesterday.

 The $AUD is also leading the market this morning

 Bigger picture, the $AUD is pretty much in line with the SPX, things could have gone south from yesterday's close.

 The Euro and SPX are moving pretty much together this morning

As for sectors today vs yesterday, Financials are holding, the flight to safety sectors are falling off, healthcare, staples and utilities.  Energy is rotating in, Basic Materials where a lot of momentum stocks are, is also rotating in, industrials as well. Tech and Discretionary are lagging in relative momentum vs the SPX.


Overall, not a perfect picture, but much better than yesterday when it was starting to get a bit scary. I don't want to confuse new members by sounding like I'm bullish on the market, I'm only bullish for a near term (or sub-intermediate trend) up on a short squeeze, longer term positioning is quite bearish.