Risk Asset Layout Update

 CONTEXT didn't look too excited either in to the AA AH run up.

 Commodities showing much better relative momentum than the SPX today,,,

 Longer term the confirmation troUble with commodities seems to finally be ending, this doesn't mean commods can't fall from here, but as long as they stay roughly in line with the SPX, the sub-intermediate uptrend can continue (AFTER A PULLBACK-AS THAT LOOKS TO BE THE NEXT SIGNIFICANT MOVE COMING).

 Commodities vs. the Euro intraday, you can see what commodities were following, albeit at a rate that is above the normal correlation. Tomorrow we may get some commodity short set ups as they look to be in the over-valued area now. I was hesitant today with GLD and USO, they didn't look quite ready, but tomorrow I think we have a good chance of picking up a few trades in the space.

 High Yield Credit is holding up-this too is supportive of a resumption of the sub-intermediate uptrend, so long as HY credit can maintain a rough correlation with the SPX in the days ahead.

 Longer term the first time HY credit fell out with the SPX, the SPX pulled back shortly thereafter. So far so good.

 High Yield Corp. Credit, a bit choppy today, but all in all, in good position longer term.

 The longer term view.

 Yields were roughly in line today, they close an hour earlier than stocks so we didn't get to see if they'd push up with the market during the last hour.

 Longer term this is one of the worrisome charts as the dislocation is pretty dramatic here and Yields are a good leading indicator, this gives you some idea of what a pullback "could" look like and why I have suspected this pullback will be more volatile than what we'd normally associate with a pullback, but that is totally in character with the market's behavior which has been a meat grinder for those chasing the market or trying to force trades on the market. The market sets the rules, we just try to use the proper tools for its mod.

 The $AUD still in line with the SPX, still supportive.

 Looking at the Euro/Dollar update from today, I'm thinking that this move in the Euro is being sold in to. If the Euro can lift a bit more, the SPX can probably get into Friday's gap area, so long as the current 3C readings continue on course, everything makes pretty good sense with selling expected in to any quick move higher in both the Euro and the market lading to our pullback.

 Longer term, another worrying signal as the Euro is very diconnected from the normal legacy arbitrage correlation, I'm surprised arbitrage traders have let this go on so long without taking advantage of it.

A for sector rotation, it looks pretty much like I would expect, given expectations. Financials, Energy, Basic Materials, Industrials and Tech are slowly leaking off as the market looks to be getting ready for that pullback while the flight to safety trades rotate in, Healthcare, Utilities, and Staples. Discretionary is the only risk on sector that seems to be holding its ground, although not in strong rotation.