Leading Indicators

***Note, email response will be slow today, I think this will be a fast moving market, therefore my first priority is to all members, meaning must keep an eye on the market before I can get to emails, but I will try to respond and eventually I will.

As for Leading Indicators, it may seem early to look at them, but when a market is moving fast with this kind of volatility, things move very fast.

For instance, I'm pretty sure we aren't going to see any significant reversal before High Yield Credit diverges negatively with the market, I already mentioned HY Credit, the less liquid type making such a move this early...

 HY Credit has lived up to our name for it as a Leading Indicator, it led the market late Wednesday, it was one of the warning signals not to short this market on yesterday's volatility and ...

A closer look today, we see it is the first mover, this is because it is much less liquid than HYG Credit.

As for High Yield Corp. Credit (HYG) which is one of the levers that are being pulled early to give this move the extra emotional punch as you can see by the early SPY Arbitrage...

The levers have been pulled a couple of times, I know which one.

Back to HYG...

 Interesting that it was leading late toward yesterday's close, but it seems a bit flat today after the initial move up.

In fact I captured this about 10 minutes later and it is continuing to deteriorate, this will have to be negative vs the SPX I believe before any kind of move down in the market comes, but what a bull trap this sets.

Risk sentiment is actually fading via our two asset/indications, FCT and HIO.

As to others...

 Commodities are in line with the SPX, but actually a bit weak vs. their correlation with the $USD.

 I'd think commodities would be more vertical with the dollar down like this.

Long term Yields are exactly where we want them, this is the largest divergence between Yields and the SPX I've ever seen, it's not good for the market when that cracking sound comes, but intraday...

 They are mostly in line, fading a little, they are worth watching.

As for the lever used in the Spy Arb chart, there's no question... TLT

 Doesn't that move down in TLT vs the SPX look a little extreme? That's our lever.

VXX (VIX Futures) is actually holding up better as it should have made a lower low, but I suspect protection is being bid in VIX Futures.

 If we look at VIX Futures longer term, note where the SPX is now vs the past (yellow), remember VXX should trade roughly mirror opposite, but it hasn't made those lower lows, why? Protection being bid and where is it bid the most? Right at the orange area. Interesting huh? How many of you trade VIX futures?