Risk Asset Update

Here we are, the Risk Asset layout is our more detailed version of CONTEXT, it confirms CONTEXT and is now giving a majority of signals that we have used so effectively in the past to time reversals and be in the trade BEFORE the move.

 Commodities as a risk asset are way underperforming the SPX today as they have been the last couple of weeks.

 Commodities were week over the last few weeks, this quick burst I'm betting was a sector head fake move.

 This is FCT, as a student of the market, I'm not ashamed to say a member told me about this one and I verified it, when FCT diverges, a reversal is near, it is diverging.

 Yields are also diverging, they are like a magnet for equities.

 I think the same thing happened with yields as commodities, in any case, they are negatively divergent, we seem to be right in the reversal zone.

 The Euro is also a leading indicator as it moves opposite the $USD and the $USD moves opposite risk assets, in simple terms, when the Euro falls/diverges, the market typically moves with it as a way to view the inverse $USD correlation with more ease.

 HY Corp Credit isn't performing well today, it's well below the close yesterday momentum-wsie.

 Here's the big divergence in Credit, credit leads, stocks follow, this is ugly for the market.

 Here's high yield JNK-Junk credit also recently not able to make new highs with the market and diverging negatively this week.

 The Dow in green vs Transports in red, typically they move together in a healthy market, the last divergence in 2011 led to a 20% drop, we are diverging again.

 Financials were the thorn in our side the last week, look at them compared to the SPX, I think its safe to say they are rolling out of risk-on status and in to risk off.

Sector rotation from yesterday shows financials weak and getting worse, Energy losing ground, Discretionary too. Tech is in an area that is rather flat, but holding-our head fake moves? The Flight to safety groups are rotating in, Utilities, and Healthcare.

I like this, today is a good day for us.