Leading Indicators

There are several mildly positive indications, one that exemplifies the problem of judging a move and what it can do and some charts showing what Wall Street can do when it puts its mind to it.

 This is a good overall representation of what Wall Street can do, today may not seem like much of a strong day, but that's all relative. Commodities are in brown and the $USD is in light blue, note how commodities follow the legacy arbitrage correlation of a strong dollar and weak risk assets, yet the SPX in green not only moved higher yesterday despite the dollar being stronger, with the Dollar MUCH stronger today, the SPX is holding its ground, it should be somewhere around commodities or even lower, thus the relative strength vs the FX correlations today is impressive; THIS IS WHAT WALL STREET CAN DO WHEN THEY PUT THEIR MIND TO IT, SUPPORT A MARKET THAT SHOULD BE 1-2% LOWER (maybe even more)  RIGHT FROM THE OPEN.

 The AUD is down today, partly I'd think because of $USD strength, intraday this isn't the kind of signal I like to see for a continued move higher in the market, but...

 Longer term the $AUD is still at a significant positive divergence vs the SPX, implying more upside.

 The 5 min EUR/USD since yesterday's 4 pm close, this is a big move down and a break of the psychologically important $1.29 area, the last time the market was below $1.29 we were near the recent (last week's) swing lows.

 The EUR/USD though hasn't lost much since the NY open today, as far as I can tell the Euro lost ground on expectations the European PMI manufacturing was going to be horrible and the US NFP was going to be great, the NFP was great, but the EU PMI wasn't as bad as expected, in fact in areas it was much better than expected, so it will be interesting to see if the pair re-discounts the fact as it discounted the rumor.

 This gives you some idea of where the SPX would normally be on a day like today, probably probing the $1400 level, maybe even lower, so I hope that gives you some idea of the influence Wall St. is exerting on the market today.

 FCT intraday is in a positive divergence.

 Longer term it remains positive and is gaining some ground rather than going negative, implying more upside ahead.

 Yields intraday are in line with the SPX movement


 Longer term they still remain in a leading positive divergence, but this is one leading indicator that has a current reading lower than I'm comfortable with for a VERY confident outlook on near term trade, note the emphasis on "VERY".

 HYG Credit intraday also looks better than I'd expect, this is good for near term trade expectations.

 Longer term we saw credit and the SPX hit reversion to the mean, I'm happy to see credit moving up from here.

 Junk Credit is similar, a little less intraday performance.

 It is also moving up and away from reversion to the mean which is a bullish signal for the market.


 I'm impressed with High Yield Credit today, hanging in there, this also gives me confidence in near term expectations.

Sector Rotation (which is on a relative basis) is seeing Financials staying in rotation, Defensive sectors are largely declining despite a small bump in Healthcare today, Utilities lost more ground. Energy lost ground as would be expected from the Dollar moves, Industrials are staying strong, Tech isn't that bad on the dip today, Discretionary is interestingly strong.

So far rotation still looks favorable overall.