Closing information with these indicators is always best, but they did give us some early clues yesterday before the close as to what was going to come, specifically a move higher in the SPY which has started, strangely we were able to see that the QQQ and IWM didn't look to be as strong, it's rare that the averages don't move together.
Tonight I'll update these again, but so far what I hoped to see in the theory I laid out last night has started to materialize.
Yields...
This is a really nasty longer term divergence between yields and the SPX, typically yields will pull the SPX toward them when they are divergent like this, so for now I'm still supporting the bigger move and the point of focus is still to the downside despite this volatility and strangeness in the market.
HY Credit was moving up yesterday hinting the SPX would follow today, it moved up more today which hints that the SPX is NOT done with an upside move (at this point I think a shakeout), but there is deterioration in Credit as the day wears on, they will almost always flee from Credit before the market follows as Credit positions are much larger.
High Yield Corp. Credit gave the same indication yesterday and is also starting to break down today, think of this as an advance look or road map for the market, it's not entirely that simple, but that's the gist of the idea.
Junk Credit is also looking as if it has topped here.
Shorter term today Treasuries saw distribution as the market moved today to its lows earlier, the money presumably went back in to risk assets as the SPX headed higher.
The longer term picture in Treasuries-the safe haven trade against a market decline is still positive, but needs to be watched carefully. This implies that the larger move in the market is still a move down.
So far we are seeing early hints that the theory from yesterday is pretty close to on track, so we'll keep watching for more clues and opportunities.
I will say, this is one of the stranger 24 hour periods I've seen in the market.
No comments:
Post a Comment