Market Update: Leading Indicators

There still aren't any really great trade set ups, simply because the next expected move isn't that large and still within the chop, that's why most ideas this week have used leverage.

Leading Indicators are in line with short term expectations, even though I wouldn't expect much movement today because of the pin, the late Friday movement usually doesn't have much to do with the trend, however the 3C signals are important.

As I was saying, Leading Indicators (always compared to the SPX in green unless otherwise noted).

First and most important, Credit.

 Overall HYG Credit has remained largely within a wide, choppy range with the SPX, more specifically though...

 Intraday HYG is not moving with the SPX which suggests again a move down toward the lower end of the SPX's range.

JNK Credit is acting a lot like HYG, intraday it too is leading the SPX lower.

High Yield Credit is the more skittish because of the lower liquidity, I mentioned last night it has been pulling back/consolidating, nothing that puts the larger bounce in danger, but certainly signaling that a move to the downside after nearly 3-days in this range, is highly likely.

 Here's a closer look intraday of HY credit vs the SPX, clearly credit is NOT following equities here and credit typically leads, both longer term and often short term, especially at pivot points.

VXX, short term VIX futures has an inverse relationship with the SPX, so as the SPX moved to a higher high today, VXX "should" have moved to a lower low, we often see this and when that doesn't happen, it represents demand for protection in VIX futures, this could be because of an expected pullback or because of events in Syria with the weekend coming, I suspect a little of both.

Yields tend to act like a magnet for equities as you can see here, however on a short term basis (signal over the next couple of days), Yields are suggesting a move lower in the SPX as well.

Here is a closer look.

Finally our sentiment indicators, HIO has been in good shape with the longer term signal pointing to a decent upside move OUTSIDE THE RANGE, but intraday, the last 3 days it has been pointing toward that same pullback that so many other assets and indicators have been pointing to.

FCT, the other sentiment indicator has been less enthusiastic, but at least recently flat in a choppy range, however like HIO above, it too has seen about the last 3 days moving to the downside.

This is not a downside move that is so large that is suggests the pullback and move to the upside are skipped, it would have to be much more extreme to signal that, but it does signal a move to the downside for the SPX, a move I believe will take out the 8/28 lows before moving higher.