Risk Asset Update

First of all, watching CNBC (I NEVER watch unless it's F_O_M_C day), but I can't believe how they are defending the algo trades and calling them a mistake, this was NYSE wide, this wasn't one fat finger trade, but CNBC needs people trading stocks to stay in business.

So earlier in the week I said that the Risk Asset Layout, may very well be the clue that gives us the best indication of what's going on with the market. Early in the week there were some negatives, but there were also some assets that looked confused or were just not negative, yesterday we saw them move a little closer to the negative side (and this layout has helped us call almost every major turn), today it is moving even more negative.

The F_O_M_C is a wild card event, but as I said, we have to work with the best information we have at the time, someone may know what the F_E_D will do and that may be reflected in the market, but we don't know so we have to use the information we have.

That said, here are the charts and where the changes today are.

 Commodities that were strong vs the SPX had started to break-away, I thought maybe it was China, being China wasn't that bad and the momentum in commods is worse today, I'm guessing it's the Global manufacturing numbers. In any case, commods peeling away from the SPX is not good for a risk on move.

 High Yield Credit shows the positive and now negative divergence, this has been in place and troublesome all week, it was HY Corp. credit that was going the other way causing some question.

 Yields which are like a magnet for equities are still dislocated and bad enough to take the market down, we have seen smaller dislocations take the market down in the past.

 Yesterday High Yield Corp. Credit did what I hoped to see by the close, today it's much worse, it is now dislocated, both HY credit indicators are negative.

As for Sectors, Tech, Discretionary and Industrials are lagging-these are risk on groups. For the most part, the defensive sectors are hanging in there.

This may be a clue as to what is coming, in any case, early in the week we were negative, but somewhat split, now we are moving much closer to totally negative.