Risk Asset Layout Update

Not much has changed since Friday as far as this layout giving a lot of good signals for a reversal.

 As a risk asset commodities are really underperforming today as they have been recently, it's just the downside dislocation from the SPX is growing. Today commodities didn't even attempt to make an early a.m. high above Friday's range.

 Longer term commodities vs the SPX have been coming unglued, but they were moving in the general direction of the SPX, recently that has changed, they are just heading the opposite direction, this has never been a good signal for the continuation of a rally.

 Yields are what I often call, "A magnet for stocks", as you can see yields today wanted nothing to do with the move this a.m. or late Friday, they are negatively divergent with the SPX and they have always provided good reversal signals when they dislocate from the SPX.

 Probably my favorite currency as a leading indicator is the $AUD, here we see it has been in line with the SPX for some time, but last week we saw the first break with the SPX, today we see a much deeper break with the SPX.

 The Euro intraday is offering some support as the news on Greece provided a little lift to the Euro, this in turn helps the market, but this looks very transient, which is in line with our other charts and analysis.

 Longer term the Euro is dislocated from the SPX, if we looked even longer, it's much worse. There tends to be reversion to the mean at some point as the legacy arbitrage correlations take over, the reversion to the mean is much lower than what you see here for the SPX.

 High Yield Corp. Credit which is a good candidate because it is so liquid is also negatively divergence with the SPX and in fact making a new low today, even as the SPX fails to do the same.

 HY Corp. Credit as mentioned hasn't made a higher high with the SPX since July 30th, last week it really started to dislocate, as they say, "Credit leads, stocks follow".

 The High Yield Junk Credit/JNK also hasn't kept pace the last couple of weeks, but worse has been the last week in which it has moved in the opposite direction from the SPX.

All in all, when we see this many of the indicators dislocated from the SPX, it has always been a major turning point in the market, this would be the 4th for this year.

As for sector rotation today, Financials were/are showing a little life, they saw some momentum as the market was flat just before it lifted off with AAPL around 12:45 today. Energy and Industrials are rotating out, Tech of course is up on AAPL alone, but as you know I don't think that will last long. What is interesting is that the defensive sectors haven't lost any real ground considering Tech and Financials, Staples, Healthcare and Utilities are all still in rotation as flight to safety trades.