Leading Indicators-Market Update

I'll give you a written summary.


I see the market today as being in a worse place than yesterday, but very short term, intraday we should see some upside correction, this can be used to enter short positions tactically on price strength.

I'll continue to monitor the charts and make sure they continue to deteriorate in to a correction.

The Australian Dollar which is my favorite currency as a leading indicator is weak, it has been weak, it is getting weaker and this is not a good development for the market.

This morning I mentioned the EUR/USD hit >$1.33 and then lost it, yesterday I told you I see very high probability negative divergences there, it is starting to lead the SPX lower as the two are "Usually" in near lock step. This is another negative development for the market, although no where near as bad as the Aussie $.

Yields intraday have stayed strangely in line with price (SPX).

High Yield Credit is slightly weaker overall on the day vs the SPX which is good, but not a great signal, however we have seen some very fast moves in this asset such as yesterday when  I said they will want to close the market/QQQ strong and we saw that quick end of day ramp, HY Credit went in the exact opposite direction and hard so it was telling us that credit traders were not willing to take on that additional risk, so we could see this change quickly again.

High Yield Corp. Credit is marginally weaker on the day, no real strong signals there, Junk Credit is a bit weaker than HY Corp. on the day thus far.

Commodities are performing VERY POORLY vs the SPX, I suspect they are keyed in to the underlying weakness of the Euro and underlying strength of the $USD which is bad for most risk assets incl. stocks and commodities.

Treasuries (the flight to safety trade) are in an overall better place for a downside market reversal than yesterday, they do appear to be taking a breather at this moment.

VXX is in a much better place, it is taking a breather intraday and should see some downside consolidation about now, the same can be said of UVXY and XIV.

The impression I get is that we are at a pivot point or a reversal area and we are seeing a little more of the "reversals are a process theme" than the "sudden reversal to the downside", however I wouldn't rule out the sudden move to the downside as the price action is more like loitering in the area than involved in a process if that makes sense.