Risk Asset Market Update

The market is pulling back on the intraday negative divergences that I have been talking about and AAPL is there pulling back as well, but as mentioned earlier, I think this is a healthy pullback and nothing to be concerned with if you are long for the swing move up we have been preparing for.

 AAPL 3 min intraday negative divergence for a pullback

 AAPL 10 min chart still looks great for more upside after the pullback is complete, it may be a day, it may be a half a day, we will just have to see how 3C reacts on the pullback.

The 1 min NASDAQ futures negative divergence...

As for the leading indicators of the Risk Asset Layout... (SPX is always green unless otherwise noted)

 High Yield Corp. Credit is in line with the SPX today, this is a good sign for a continued bounce, at some point it will diverge and we'll have to start looking for the long exits and the new short position entries, but not yet.

 On a longer basis, HY Corp. Credit locally is leading the SPX by a fair amount still, this is also good for the continuation of the move higher as we have expected, we'll want to watch for serious divergences here to warn us of a turn just as the positive divergence warned us of a bounce.

 JUNK HY credit looks the same as HYG which is also good for the bounce.

 Longer term Junk HY credit is still leading as well.

The long term charts are showing HYG and JNK negatively divergent with the market, but that is the bigger picture trend, for now we have a bounce and it looks good, but it should be moving in to a more negative area where we can expect a bigger move to the downside.

 The $AUD which is an excellent leading currency because of its connection with the carry trade was positive vs the SPX recently, this helped us determine near term probabilities were to the upside. $AUD is lagging intraday as you can see vs the SPX.

 Here on a larger chart, $AUD went positive and gave us a strong hint of the bounce to come, it i not keeping pace with the SPX on today's move, but it shouldn't, it was used ahead of time to finance a carry trade, even a small one, they aren't going to buy in to strength, they buy weakness and sell strength o $AUD not keeping pace is not a surprise and we'll be looking for signs of it being sold off and the carry trade being closed as a reversal signal of the move higher in the market.

 Long term, as I have noted, the bigger picture beyond the bounce/rally we are seeing now, is very negative, this is why I want to short strength when the time is right and the long term chart of $AUD shows us this very negative divergence. This is the importance of understanding the relationships in multiple timeframes, it allows us to plan in advance and have an idea of WHAT TO EXPECT and how to take advantage of that.

 The Euro is more of a confirmation currency or arbitrage, it's moving closer to the SPX, it is not a carry trade currency so the difference between the performance of the Euro and $AUD makes perfect sense.

 Longer term Euro/SPX, as you can see, there's a tight correlation, they move together and the Euro does not have the predictive power the $AUD has.

 Yields intraday are moving as they should and confirming the move up thus far short term.

Longer term they are still a bit more positive than the market so we should still see more upside.

Longer than this, rates are very negative and the long term picture doesn't look good.