Leading Indicators... As Suspected

It's getting silly now when you see certain things, you just know what you are going to see somewhere else, for instance the SPY Arbitrage Chart. Or how about currencies, yesterday I thought "something" was up with them, whether they were trying to support the market or they knew something about the market (it trying for a new SPX high) and were reflecting that. Today currencies are very obvious in their support for the market with the possible exception of maybe the Yen, I think it could be moving on its own, but it is having an impact on the market.

First the updated SPY Arb. just so we know what we are looking at.

 As you can see the pressure exerted on the short term manipulation levers has never let up today, this is how bad they want the SPX new high and how difficult it is for them to achieve that, virtually no demand or risk appetite for that move at all.

So first lets go to the obvious levers which are the same 3 that make up this Capital Context model...

HYG High Yield Corporate Credit-Since the financial crisis, banks have been selling credit assets, it is now very hard to put on a diversified High Yield Credit position as supply is very low so HYG has become a great alternative for smart money, they can put on a diversified HY Credit (risk on) position and get in and out through extremely good liquidity, thus it makes a perfect asset to manipulate the markets with as "Credit leads, stocks follow", an intraday rise in HY Credit is taken to mean smart money is displaying risk appetite, often intraday though it's just short term manipulation.

*Leading Indicators are always compared to the SPX in green unless otherwise noted.

 HYG was supportive early yesterday then gave out, I suspect that was real selling and thus the market had such a hard time around 2 p.m. at resistance, note today on the open HYG is already higher than yesterday's highs, thus the early SPY Arb we saw that was positive right off the open, with the SPX down and HYG up, this should pull the market up or at least that's the idea as HYG was likely accumulated in pre-market where it's easier and less expensive to move so it opened higher.

 Intraday, HYG is lagging again

TLT-Long Term Treasuries

 Treasuries usually move almost the mirror opposite of the SPX, this is why we knew Treasuries seeing non-stop weakness even when the market pulled back was telling us Treasuries were being used to manipulate the market short term-with volume so low yesterday it was easy.

Today we are seeing virtually the same thing, it's obvious TLT is one of the levers in addition to HYG as you saw above right on the open.

Treasuries longer term however..."should" be making a lower low at the SPX's higher high-Remember the "Great Rotation From Treasuries to Stocks" that never happened?  At point "B" the SPX is higher than point "A", this would suggest treasuries should be seeing a lower low, they aren't, there are other reasons, but 1 part is true demand as we have seen in 3C in the open market.

This is a Flight to Safety move.

VXX -Short Term VIX Futures

 Yesterday we saw a reach for protection as the VIX futures were bid up, first VXX refused to make lower lows at SPX higher highs, then as the SPX couldn't break through in the afternoon, VIX Futures (protection) was bid sending VXX higher even though this is another that normally trades virtually the mirror opposite the market, note both moving higher at the same time.

Today intraday they are behaving normally.

 Longer term the SPX making higher highs should see VIX futures making lower lows, but there's no such thing, this is what I noticed a couple of weeks ago short term and again last week short term, here it is longer term, the conclusion, protection is being bid.

 HY Credit did make a supportive move by making a higher low while the SPX made a lower low intraday today.

Junk Credit which is understandably High Yield also gave out yesterday afternoon when the market couldn't break through, like HYG (it often trades exactly the same), it gapped up here and is leading the SPX at the time of capture.

In other words, there is support from other asset classes that are being manipulated to help the market higher.

Junk Credit making a higher low while the SPX makes a lower low supports the SPX sending it higher.

Yields-Normally Yields move with the market, Yields tend to act like a magnet for stock prices.

 Intraday Yields seem to be in line/supportive.

 Look on a longer chart and you can see the market has some catching down to do, reversion to the mean. If I zoom out further, it only gets worse.

Currencies- Yesterday I thought they might be connected in some way, either they know or there's some manipulation, I'd think they know or think they know something.

 In any case the $AUD is obviously much more supportive today than even yesterday

The Euro is as well

This is the Yen, generally the Yen moving up (right now) is market negative, Yen moving down is supportive, look at the high of the Yen and low of the market today.

 $USD is very supportive of the SPX today with a lower low

According to the normal $USD/SPX legacy arbitrage, the SPX should be EASILY making a higher high today.

 Commodities were supportive early yesterday, they were leading at the close, they were supportive at the SPX a.m. lows, but were giving out at the time of this capture.

Something is wrong here.

This is commodities vs. the $USD, again according to normal Legacy Arbitrage, commodities should be easily hitting a new high for this move.

Sector Rotation today shows the hunt for either protection or dividends is still ongoing in Utilities, the sectors in orange haven't done much, the ones in white were leading at the time of capture on a relative basis, so Tech was an obvious leader, why?

AAPL, but recall I said intraday there are negatives building in AAPL, they keep building, we'll have to take a look.

The bottom line is the short term action, even with manipulation is finding it very difficult to get above the SPX former highs unless they just want to keep it in the area and bust through on a specific day like they did last time when the SPX made new highs on the very last day of the quarter on a 3-day weekend when the news could paste headlines everywhere that the market was making new highs, before that the SPX sat about 2 points from new highs for 3 weeks! YES, THAT WAS PLANNED!

The other bottom line is this trouble below on the SPX (and all other averages) is not going away...

 30 min SPY leading negative in to higher price highs, but this is just a small part of the extent of the distribution. Look at the same timeframe zoomed out...

You see the SPX and 3C 30 min chart traveling in confirmation to the left at the green arrows, then a big accumulation period around October/November and the run up to distribute those accumulated shares and then turn around and sell short in to upside momentum, this has produced one of the largest leading negative divergences we have seen in some time, the entire rally this year has been sold in to, just look at breadth for proof, those are hard fact numbers.