Levers

This may make for some decent trades, perhaps a treasury related leveraged ETF later, we'll see, but for now and I point this out more for your understanding of what moves a market, rather than the CNBC line, which I don't blame them, the markets are complicated and can't be addressed in 30 second soundbites, but for your knowledge, for your tool box or diagnostic set...

Of course as Europe closes,

 While Capital Context's SPY Arbitrage model is very useful for a quick look at what is going on, all you really need to do is look at 3 assets and how they perform vs the SPY/SPx and those are HYG (High Yield Credit), TLT (20+ year Treasuries) and VXX (Short term VIX futures). Around 10.20 the Arbitrage model went positive...


Shortly after the SPY went positive, the markets largely move together directionally at least.

TLT on the open had a negative intraday 1 min divergence, so it pulling back is not surprising, pulling back in to a gap is even less surprising on that signal, this may make for a good leveraged Treasury ETF trade, but not quite yet.

When Treasuries are knocked down, that changes the correlation or Arbitrage that so many computers (algo programs) trade from.

In similar fashion,  when VXX falls as it did around 10:15 on, the algos read that as less fear in VIX futures so again that becomes a buy signal. Keep in mind that these are large markets and can rarely be manipulated in this fashion for very long (intraday intervals).

 HYG (High Yield Credit) is a risk asset so it moving higher suggests smart money that largely are the only ones trading in the credit markets have an appetite for risk, again changing the arbitrage to a positive skew as the model shows, although HYG didn't move much, it did move. It is still yet to break the lows it bounced from, but sold off all of yesterday's gains as suspected.

Looking at the TICK chart, it's still VERY weak as far as internals, it hasn't broken +750, meaning of the thousands of NYSE listed stocks, at any one bar, there haven't been more than 750 stocks advancing over decliners, usually on any move up like that we are pegging +1250-+1500 so the internals here are very weak and the fact they needed to resort to moving these assets to move the market also gives away a hint.