An Early Look at the Risk Asset Layout

Usually I don't like to look at this layout until later in the day, morning trade is notoriously manipulated. In fact when my sole and only source of income was trading for a living, I often wouldn't make any trades until after 11 a.m. unless there was a clear morning range in which case (back in the "olden" days) a break above or below that range would often indicate the direction of the close, but with all of this volatility of this year that has increased exponentially, even that tactic seems like it was of many years past.

A.m. trade often is about hitting stops, triggering orders and then maybe stopping them out. The NYSE specialists don't even have to open a stock at 9:30, they can and have opened them late (one time I had a huge opening profit in SKF, but it wasn't opened until 10:45 and the profit was then a loss). The NYSE specialists also choose the opening price unlike the NASDAQ in which it is based on the bid/ask; as a result, many day traders (again back in the day) wouldn't trade any stock on the NYSE.

In any case, the point being, often the a.m. information isn't as reliable as you'd like, but I decided to take a look any way.

 High Yield Credit over yesterday and today isn't performing that great, in fact it saw a decent sell-off near the close yesterday, has failed to make higher highs with the market this a.m.

 High Yield Corp. Credit which hasn't made a higher high with the market since July 30th, also saw a sharp sell-off in the afternoon session yesterday and remain dislocated from the SPX.

 Here's the same HYC credit today, not enthusiastic about early trade with the SPX.

 The Euro's dislocation is really becoming a problem, actually it's more about $USD strength, but the Euro serves as an easier to read proxy. Remember the trend expectations for both currencies I posted  August 1? They are right on track from the short term and now the longer term.

 The recent correlation between the Euro/USD and the market has now decisively given way for the near term trend, longer term it's already in bigger trouble.

And Financials that I commented on last Friday have also broken with the SPX's momentum finally as we have been seeing 3C indications of.