First remember the very fast change in USO's 1 min chart to a leading positive divergence above the intraday highs in 1 hour. Now take a look at ES. ES lost 26 points today from regular hours highs to lows, yet in the last hour was able to put together a leading positive divergence like this, hitting a new high on the day as ES is just barely of the lows in price, it seems to me that there's a very fast change in underlying institutional activity, as if something has come to light that only Wall Street knows about as of yet. Remember, most people are only seeing price and standard indicators, very few people are seeing what we see.
ES's leading positive divergence in the last hour, making a new high on the day after a 26 point drop!
Yesterday's commodity activity was a little more enthusiastic than the FX correlation that normally drives it and was quite a bit more enthusiastic than the SPX. Even today as commodities slipped -1.6% vs the SPX's -0.82%, the relative performance on the day shows the SPX making new low as compared to yesterday while commodities stayed off that new low as compared to yesterday. There's more to relative price performance than just percentage moves and that's why this layout is set up the way it is.
Like I mentioned in the last post, Credit is a huge market, it's the playground of institutional money and I would think that if there's a quick change in positioning, they aren't going to be able to hide it through quiet accumulation. If quiet accumulation was the goal, they'd likely only be able to accumulate about 10% of the size position that they could accumulate if they just bought in the wide open, but as most retail investor aren't even aware of credit's role as a leading indicator, retail isn't going to be watching, however, other institutional money would be watching and that may explain some of the very quick late day positive divergences as institutional money that may not be privy to whatever is causing this noise/,changes in underlying trade, would notice a change in credit such as this one today in High Yield which dramatically outperformed the SPX, this is a positive divergence and under normal circumstances with our use of this layout, it would be a tell that credit is leading and equities will likely follow.
Here you can see the leading quality of Yields which went negative on the 5th vs the SPX, the lack of confirmation would be a negative divergence and yields tend to attract equities like a magnet, today's flat trade in yields may not jump off the chart, but it is an important indication.
The $AUD is in line with the SPX, no information there.
The Euro was a little more enthusiastic yesterday on a relative basis vs the SPX, commodities followed the path of the Euro yesterday, but were even more enthusiastic, the late day positive divergence in the Euro vs the SPX is interesting, although it is small, I probably wouldn't mention it if we had not seen other 3C charts make dramatic moves in the last hour or so of the day. My gut feeling is almost as if someone knows something and as trade developed during the day, smart money that wasn't in the know, at least noticed changes in trade and also started to grasp something is up, even if they may not know exactly what it is, much in the same way we are approaching this.
Finally High Yield Corporate credit is pretty much in line with the SPX today, however I do want to see what if any underlying 3C signals may be present in this risk asset. I'll let you know if I find anything.
No comments:
Post a Comment