Leading Indicators Update

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

 Commodities vs. the $USD (green) - To the left you can see something that looks like the normal legacy arbitrage relationship between commodities (really most risk assets including stocks) and the $USD, pretty much right through the green arrow. At the red arrow the $USD is falling-in part due to the rise in the Yen we were expecting earlier, but commodities today thus far haven't been able to capitalize off the $USD weakness at all, being in the same spot they were before the $USD lost ground intraday today.


FX-Currencies

 The $AUD longer term is SEVERELY dislocated from the market, it use to be one of the best leading indicators, but now it is leading deeply negative, way more than what can be seen here on this 5 min chart. You can see a little intraday help from the $AUD today, but it's not translating in to much.

 Almost everything I said above is true for the Euro as well, including the intraday move today to support the market intraday, again not translating in to much.

The larger view of the $USD "W" base, in yellow was the pullback we recently were talking about and a breakout to stage 2, this is where I think the market is going to have a difficult time ignoring the $USD and I believe this is in direct response to the F_E_D's stance of tapering asset purchases.

As seen above with commods, the $USD is pulling back intraday and over the last few days in a consolidation.

I believe this is why the $USD pulled back-remember the Yen strength earlier I thought would materialize?

 Here's the Yen rallying off the signals we saw earlier.

I believe that's part of the reason that the SPX/ES (below) is having such a hard time gaining a foothold.

ES with an intraday negative, thus far unable to make a higher high, but it has made a lower low. TF and NQ look similar, NQ probably looks the best on a relative basis between the 3 Index futures.

Credit, Treasuries and VIX Futures (the 3 SPY arbitrage levers of intraday manipulation)

 HYG longer term has severely dislocated with the SPX above, being credit markets are so much bigger and better informed, they tend to lead as stocks tend to follow. In yellow is the bounce area of last week and what's  left this week before HYG heads lower. This is High Yield Corporate Credit and a very liquid, institutional friendly asset they use to express a risk on position.

 A closer look at the yellow area above, the first HYG bounce in red helped the SPX as that is what this correction was designed to do, but it was sold right away and that was it for the SPX's gains that day. There was another attempt by HYG to help the market in Orange at the first SPX triangle last Thursday, the SPX failed and the next attempt was as the SPX broke out, but HYG couldn't make a higher high-every time it was sold in to as it tried to bounce. Today HYG was helping or trying to help the SPX, it has swung up a bit higher as it needed to as TLT has moved higher (HYG is trying to make up for TLT's strength which is not market friendly).

 This is an intraday look at HYG and in red/white I'm showing even on an intraday basis how credit leads and stocks follow.

 HYG's intraday 3C chart is a mess, lots of distribution. If we had anything near confirmation 3C would be well above where the orange arrow is to the upper right.

 The 3 min chart that had the accumulation to send HYG higher has really fallen apart, you can see to the left the first bounce in HYG sold in to as I mentioned above and every other attempt being sold in to a well. The point of this is smart money is NOT embracing risk (HYG), they are selling it.

TLT found support as it was weaker this morning which helps the SPX, it is moving up. A member just emailed me with the most relevant question about TLT moving up right now, "Is it being sold in to?" The answer is "NO".

TLT on a longer basis, note the divergence strength at the break of support and TLT's sudden momentum off that break below support-interesting...

 VXX which is showing something similar to a normal correlation at the green arrow gathered strength (market negative as traders are bidding the VIX futures for protection), VXX gave out a little intraday, but the market hasn't made much of it so far.

 VXX like TLT showing positive 3C momentum even as VXX pulls back a bit and TLT advances.

VXX's longer term view, I just marked the divergence areas in red and white and left the chart alone so you can practice if you like looking for divergences, they are important and the best signal on almost any indicator you use.

 This is FCT showing a long term negative divergence in risk sentiment and a much sharper recent one- this started yesterday

A closer look...

 Yields vs the SPX-these two normally move together, when yields diverge, they tend to pull stocks toward them, you can see the relation above and yields collapsing today as T's are bid.

Longer term if you study the chart close you'll see what I mean, to the right you'll also see the enormity of the divergence.