Overview of Leading Indicators

This is interesting and again, this is exactly why we don't chase prices and we look at everything we can because you never know where you'll find that piece of information or maybe even just a passing glimpse of that information that the crowd missed.

For example, when I was watching Bernie speak on September 13th at the press conference after the F_O_M_C unleashed QE3, I heard the question (paraphrased) "What happens to asset purchases you undertake if inflation rises?"The answer (paraphrased) was, "We'll make adjustments to the size and composition as well as policy to get the desired effect within the CONTEXT OF PRICE STABILITY".

That was the very top of the market for September 13th, that exact minute for every single average, I think I even remember the time as being 2:24 p.m.

The market did not like the fact that the F_E_D may adjust the amount of MBS they buy according to incoming economic data, rather than previous programs that had a set schedule, you knew what was being bought, how much, what day and how much and how long, this new approach that was being roughed out took away all of that certainty.

OK, so last night I looked at leading indicators and said the following,

"I find leading indicators today interesting as they are in better position than the SPX, which is something new on the day for most of them, the only one that stayed negatively divergent in the intraday timeframe was High Yield Credit, but HY Corp. Credit and Junk both showed better relative performance as did yields although longer term they are massively negative, even the Euro held up better than the SPX today, this in some way suggests to me that the upside the QQQ charts are still flashing in 3C positive divergences, as they HAVE NOT clearly taken out resistance, may in fact not be coincidental when looking at leading indicators intraday, the take away being we get more knee-jerk upside before the longer term/stronger negative market divergences finish taking the market lower from the 11/16 bounce."

"Taken with leading indicators, I wonder if the QQQ won't try to breakout. I still feel strongly we will see a very sharp reversal to the downside before this is over."
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I just looked at Leading Indicators again and for a second day guess what? They are stronger than you'd expect, stronger than the correlation with the SPX. This to me means the same thing it meant to me last night, so don't be surprised if volatility picks up.