Leading Indicators

I'm a bit biased, but I've had a lot of years of experience and my favorite leading indicator is 3C, it's also one that no one else sees which is an advantage. Is it a perfect indicator? No. Even if it was a perfect indicator, do we have a perfectly reliable market? No, MCP is a recent example of an imperfect market no matter what smart money may be doing.

Over the last year or so we've developed more to help us with better analytical confirmation.

I'm not THRILLED with the leading indicators, I find them to be about split down the middle, but the ones that are leading are truly leading and the ones that aren't are in line with the market, they are not giving the opposite leading negative signal, so a slight advantage to the leading indicators that are giving signals.

I'm most disappointed that High Yield Corporate and HY Junk Credit aren't leading, but High Yield Credit itself is.

HY Credit vs the SPX (green)-these are large markets (Credit) and HY is what is used to express a bullish opinion, this divergence and the size of it are interesting and can't be ignored.

I'm also disappointed that Yields are not leading like they were when this cyscle started, however, looking at the flight to safety Treasuries (TLT), there are interesting divergences there that may take up that slack.

 15 min looks like Treasuries have been being sold in to price strength, the same way we have 15 min positive divergences that suggest the averages are being bought in to price weakness, profits from this asset would go in to accumulating equities.

 The recent leading negative divergence on a 5 min chart over the last few days as we have seen some strong upside momentum in the same period in risk assets.

The 1 min trend needs no explanation.

As for FCT which is a better longer term indicator, but has shown some utility on a shorter term basis...

The last 2 days also have shown improvement, I wouldn't make a case based on this alone, but considering the signal over the last2 days, I think it is relevant.

 Without a doubt, one o my favorites is the $AUD, this can tell us what hedge funds are doing as far as how they get cash together to finance positions, while we can make different cases for why the $AUD is positively divergence from the SPX, there are few cases that can be made that can call it anything near negative, in fact if it is for the reasons I suspect, it would be quite bullish.

 We don't look at the Yen that much, but here you can see its negative divergence sent the SPX lower and recently, it has been in a positive divergence.

Here's a closer look...