Leading Indicators Quick Update

HY Credit (HYG) is moving close to unchanged on the day, this is the negative divergence I want to see between the SPX and HYG, but it also seems to be pulling the SPX, we need the SPX to hold in place and HYG to drop.

Both Risk Sentiment Indicators are way off, major risk off sentiment today in both.

TLT is being USED VERY HARD as a lever to hold the SPX, take a look at the decline there, they are monkey hammering TLT to try to force the arbitrage Algos to bid up the SPX. VXX is also being used to some extent to counter the drop in HYG which in my view is REAL selling.

There is at least some evidence of currency tampering to support the market, the Euro is obvious with a 5 min positive divergence in the single currency futures, even though the AUD is seeing intraday distribution (profit taking on the move up), the longer 5 min chart in futures is positive, I do believe they intend to support the market with both the Euro and Aussie. It also appears not only in price, but on the 5 min $USDX chart that they are throwing some money in to knocking the $USD down (market positive). The Yen, I told you yesterday it was in a bear pennant (like a bear flag), it confirmed the flag for traders and moved lower (market positive), the 5 min chart shows another bear pennant has formed, traders will trust it because of the last move, but I suspect this breaks to the upside, maybe a crazy Ivan  shakeout first though (downside shake and then upside break), this doesn't make sense though with the other currencies, however the positive is also out to 15 min so this appears to be a longer term move being put together and not immediate support giving even higher probabilities to a Crazy Ivan shakeout (first it breaks below the bear pennant and then makes a very strong move higher which is market negative-but by that time the market should be negative).

Yields intraday are supportive, there's better relative performance recently than the SPX, so that's partly from the TLT manipulation as a lever, but it is short term supportive (again, thinking like a crook, you want this two day big move and break above $1600 all over the news this weekend-there's no reason to break that and it appears they are trying to support it, but it's a cheap, short term media manipulation trick to get retail in. We already know experienced traders are scared of this move, the move has done what it was suppose to).

High Yield Credit (not HYG) is moving lower, it has less liquidity so it can't be sold fast like HYG if need be, they need to start exiting now for a move that takes the market down next week and they are.

Commodities are also hanging in there despite some $USD intraday strength.

The negative divergences seen in the averages and the Index Futures are VERY convincing, I'm sure there's strong distribution in to this price move, there may even be an intraday move down, but just like yesterday I'm not convinced this is the time to swing for the fences and back up the truck.

This is subject to change should the data change.

Even if we see lower intraday prices in the averages or futures, I'm not convinced at all yet, we are moving in the right direction, but sending the market lower here and driving Shorts who want to fade this move in to the market would only serve as propellant should futures open higher Sunday night or Monday morning. New shorts wouldn't be enough to make a big difference, but intraday they'd be enough for and that's all they need right now.

This does not effect our Late May Puts.