As the SPX Turns

As you know, I've been looking for a move in the SPY/SPX above last Friday's intraday highs, that's where the range is, that's where the action will be. This morning after seeing some slightly longer term positive 3C charts (meaning heavier institutional activity, but still within the intraday to very short institutional timeframe of about 5 min) and last night's dominant Price/Volume relationship (if it's not dominant in all 4 averages it's not a useful signal), it seemed likely we'd get that move and so far we're headed in the right direction although as it's happening it all may sound counter-intuitive if you are use to following the market based on price only.

In any case, what I want to point out are two things. Among the charts we are seeing this (the more important charts in the institutional activity zone (10-15-30 min, etc) and among leading indicators we are seeing some of this too. What is it? The market is more delicate than you might think. As ES hits new highs for the week this morning, the TICK data is pretty darn weak as you saw earlier, it should be hitting solid +1250 to +1500 readings, it hit +1000 once today close to the open and the rest of the time in the +750 zone which is really closer to the median.

In addition, several leading indicators are now breaking a bit more seriously...

 Commodities are back in a risk off mood after having been risk off, then moving with the market for a day.

 Since the 11/16 lows, commodities have diverged negatively in a big way, this is not how a risk asset should perform in a true risk on move that has legs, commodities are now below the 11/16 lows. I know this may seem un-correlated, but it's not-this is a problem in a bigger sense than just near term, intraday or day to day trade.

 Yields today are thus far negative with the SPX, they act like a magnet for equities.

And the Euro is also divergent, but many of these are divergent in a bigger way, a more meaningful way suggesting the market as it moves up here is a lot more fragile than you might suspect.

On the other hand, until Credit takes a serious divergent turn for the worse, I think the market can still move higher at least to that level above last Friday's highs, essentially above the range.

I just wanted to point out that this is a more fragile environment than it looks, that means it's also on track for the move we expected and for the right reasons.

I'll bring you more as it develops.