Leading Indicators

So far, I'm very impressed by the leading indicators (formerly Risk Asset Layout). Credit is doing especially well and as the saying goes, "Credit leads, stocks follow", but there's a lot more than just credit looking good here.

Currencies

 First the $AUD (FXA) tends to be more of a leading currency because of its relationship in the carry trade hedge funds and others use to finance risk on positions, not only compared to the positive divergence at the mid-October lows, but right now vs the SPX (always green comparison), the $AUD is in a very positive leading position.

 The Euro has some leading qualities to it, but it's a better near term leading indicator or confirmation indicator, here intraday it is holding up much better than the SPX, which suggests the SPX is in fact building that lateral consolidation we talked about, in essence, the flat trade in the SPX is much more bullish than it appears to be when just looking at price alone (remember this is also what we wanted to see in Friday's late analysis as well as last night's and today's).

 The Euro bigger picture is also much more positive than the SPX alone would make the situation out to be.

 Yields are like a magnet for stock prices, they tend to eventually attract the market (SPX seen here in green as usual) toward them, this leading position as well as Friday's initial positive indications are a good development.

 Again, longer term like the $AUD, Euro and others (below), yields are dislocated bullishly to the upside.

Credit

 Intraday High Yield Corporate credit (HYG) which is very liquid was not only showing positive signs late Friday, but has continued on an intraday basis today.

 Longer term there's a very positive divergence in HY Corp. Credit as you can see by tracking the SPX's trend vs Credit's, we haven't seen many positive divergences in credit this year, but this is a nice one.

 Another look at the same chart without all the annotations.

 Junk Credit (also high Yield-a risk on asset) is doing well vs the SPX intraday

 And also has the same longer term positive divergence as seen in HYG.

As for sector rotation, as expected, Tech is starting to take the lead from Financials.

All in all, another good set of indications for at least our expected volatility move up/shakeout.