Following up on Early Indications

It's also VERY early to be looking at our Leading Indicators layout, but I wanted to see how they opened.

As mentioned last night, this past Friday was almost the mirror opposite of the previous Friday (Dec. 28th) when the market saw a downside move, but risk assets and Leading Indicators held steady suggesting the market was seeing manipulation pushing it down to lower prices to be accumulated ahead of Monday's strong move up, this is why I said late Friday I was much more comfortable holding QQQ Calls going in to the Fiscal Cliff debate weekend than being in puts, risk assets were telling us something.

This past Friday as the market broke north of some key local resistance areas (again as predicted early Friday based entirely on the fact that we know how the market behaves and this was the highest probability move, which was put at 80%) there was one problem as I pointed out Friday and again last night, like a mirror reversal of the previous Friday, other risk asset classes DID NOT follow the market higher.

So far on the open we have High Yield Corporate Credit in a bad spot, negatively divergent with the SPX on a relative basis which is all we really care about right now. There's a "reversion to the mean" as talked about last week as it could happen a couple of different ways, in the $AUD which is moving toward the SPX on a short term basis. The Euro intraday is close to in line with slightly better relative performance. Yields also are showing slightly better relative performance intraday,as is High Yield Credit.

More or less what opening indications among leading indicators are telling us is basically the same thing that opening indications in the averages are telling us, this initial opening move is not being confirmed and I wouldn't suspect it would be as the break above local resistance happens for a reason and that reason can't be fulfilled in 30 minutes at the end of the day on Friday.

Here's a look at the opening indications on the 3C charts...

 QQQ did move down to confirmation and then to a leading positive divergence.

 SPY stayed in a leading positive position, never confirming the downside move.

As mentioned, the IWM was the weakest and did confirm the downside off a late Friday negative divergence.

Here's the catch, these are ALL 1 MINUTE CHARTS. There's very little to NO strength at all in anything longer than a 1 min chart for all of the averages. For those who don't know already, a 1 min. positive divergence in this situation could simply lead to enough support for a consolidation and then the market continues lower. We need to see more strength in the 1 min charts and then some migration to longer and more important charts like 2, 3 and maybe even 5 minutes.

If we don't get the migration, I'd be skeptical of playing any intraday longs on an intraday bounce. What I'm basically saying is I'd hold right here until we see if there's more strength to build in, right now there's no high probability trade with only a 1 min positive in the averages.