Again, most risk assets that should rally with the SPX are in line, when they diverge from the SPX we often see a trend become unstable and reverse. There are still a few trouble spots, not the least of which is the legacy arbitrage correlation between the Euro, Commodities and the Stock Market.
Commodities vs the SPX (SPX is always the comparison symbol in green unless otherwise noted), commodities actually held better relative momentum today.
When comparing Commodities to the Euro (green), we have a 3rd day of dislocation between the two that normally would move together. Based on this and several stock charts, I would think commodities are in for a significant correction, gold may be one that bucks the trend, depending on the economic reports.
Commodities vs the Euro long term, you can see since late April this is the largest divergence between the two.
High Yield credit didn't amaze today, but it stayed within the range in which it is not threatening to further upside in the market (of course we are looking for a pullback first).
High Yield Corporate credit is much the same.
Longer term the sub-intermediate trend does not look to be threatened by the credit markets which often lead the stock market.
Yields are underperforming again and one of the few assets that do pose a question as to the viability of the sub-intermediate trend, however we have seen yields move very quickly in the past.
Longer term the divergence between yields and the SPX is starting to become an issue that may have consequences should credit or some of the other risk assets fail to keep pace with the SPX.
The $AUD as a leading indicator among currencies is in good position.
The Euro underperformed the market again today.
The divergence between the two (there's normally a fairly close correlation) is another troubling sign, but this may simply be leading the market pullback.
As for s Sector Rotation, Financials were the big loser today with relative momentum falling way off. The flight to safety sectors were out of rotation, except Staples. Energy, Basic Materials, Industrials, Tech and finally Discretionary were all moving fairly well today.
The divergence in yields and the Euro are becoming a concern, I'd like to see a pullback soon and see if they can reconnect, however in a short squeeze environment (which we have only seen glimpses of), many of these risk assets may diverge, making a short squeeze unstable and unpredictable.
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