Leading Indicators Update

There are several themes in Leading indicators: 1) we are still waiting on a very quick, short term upside event to take place (think IWM post) 2) The things I have said I wanted to see break down are breaking down and 3) the move in the EUR/USD may not be as strong as I initially thought, it may not be a parabolic retracement and instead start to fail soon putting pressure on the market so a currency update will be next, these are the triggers.

Yields paint 2 pictures, high probability move down for the SPX (always green on these charts) and some movement with the SPX suggesting some quick possible upside.

 FCT I showed you is such low beta, no one would use it for a quick move to the upside, but it is an excellent leading indicator in a situation like this for the higher probability , big picture move which it is clearly negatively divergence with the SPX and getting worse by the day.

 Intraday FCT/SPX.

 The $AUD is going in to a negative divergence w/ the SPX as I hoped.

 $AUD intraday vs. SPX, note they are trading exactly opposite-a negative divergence.

 High Yield Credit, I wanted to see a negative divergence in credit as it often leads and stocks follow, here it is, getting worse today although it started yesterday.

 Intraday vs. the SPX, down it goes. This is indicative of big money taking risk off as these are usually much bigger positions in credit and take longer to move them around.

 HYG Credit is finally out of any type of positive reading, I'd like to see the SPX follow the green arrow and HYG follow the light blue arrow; that would make for a stronger divergence.

 Junk Credit which is HY is also moving in to a negative divergence vs the SPX.

This is what has me concerned about the Euro being able to make a strong bounce from the parabolic move down (I never expected the bounce to hold, just a fast, sharp correction), however commodities are now trading as if they expect the Euro to fall and USD to rise, this would be commodity negative (SCO is one I like-short oil and leveraged) as well as stock and almost every other risk asset negative.

I ned to look closer at the Euro/USD