Here are some other indications that point to a few different thing going on, I'm not sure I understand all of them just yet, but I'm pretty sure we will. There's also data here as these charts were captured before the market averages of the last post, that showed Leading Indicators holding up just as the market was moving down intraday, suggesting it was a shakeout move (which makes sense this early in the day).
The green arrow is the EUR/USD for the week, the blue arrow is a very parabolic move in the pair, I never trust these vertical moves as they tend to end badly with a similar drop, but for now it is supportive of the market. This move looks like it was planned ahead of time and it seems like there's more of an arbitrage trade playing out this morning in several assets. So far the move is holding up, but I don't think it will for too much longer.
The Euro-FXE
A 5 min positive divergence in the Euro / FXE, it's slightly negative on the execution this morning.
A closer intraday look also shows the same, I think this will likely reverse all at once and most likely create a lot of downside pressure on the market, this may be the mechanism behind a fast intraday reversal.
This is a 15 min chart of the Euro vs the SPX (green) showing support in the currency just before the pop of trend 1 and then it went negative as the market has been lateral the last week. Today there's almost some type of currency arbitrage move to revert to the SPX, which doesn't make a lot of sense, it may just have been support for this morning's move above last Friday's highs.
This was before the last update as the market was just starting to come down, but the EUR/USD was not following it and staying in more positive or supportive territory.
The same was true of the $AUD.
And here's the 15 min chart of the $AUD with initial downside on the pop higher in the SPX and slowly it has been creeping back up toward reversion to the mean.
Even Yields this morning were supportive as the market came down.
Yields longer term are in a negative posture (negative for the market), but today even they seemed to support this move in the SPX.
Credit was the most telling signal for me as it didn't budge as the market moved lower, I suspect credit will fall apart just before a move in the market to the downside.
The VXX 3 min intraday chart is actually positive on the move lower in the VXX as volatility is correlated to the market, but underlying action is independent.
The longer term VXX 15 min chart shows what seems to be quite clear foreknowledge of what's going to happen in the market before it does, just like this important timeframe went negative at the very highs (market lows) just before the market popped higher and the VIX lower. Now we have leading positive divergences in the 10-15 min charts, but notable is today's specific move higher in to lower prices on a 15 min chart.
Commodities intraday are following the $USD correlation perfectly as they should, moving higher on a lower $USD (green).
Longer term 15 min chart shows commodities as a risk asset in a large negative divergence with the SPX, this is why I have been skeptical of this move and have suspected the moves higher in the SPX would be sold in to and that's what we have seen so far.
It's usually not good when a risk asset, whether HY credit or commodities don't follow risk-on in equities, the last commodity negative divergence to the far left was much smaller and led the market lower.
And commodities intraday held up as the SPX moved lower.
The general theme is even though risk assets that in many cases are negatively divergent when looking at the bigger picture, are positive or more supportive today and held up even in the face of market downdraft, this was expected yesterday as I thought traders would be whiplashed around, thin about it, a higher high in the SPX and the buyers that brings in and then it moves down to almost unchanged, that must have shaken things up a bit and the other averages were worse.
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