Market Update

There are still some great signals developing and I'm still weary of this potential reversal (probabilities are increasing) being too much of an event and less of a process, UNLESS AS I MENTIONED SEVERAL TIMES EARLIER, THE NY F_E_D'S TRADING DESK PUTS OUT THE MARKET'S ENDORSEMENT OF YELLEN.

Can't you just see the dumbed down CNBC headlines? "Market rallies in support of Janet Yellen"...Oh I swear if that happens my stomach will literally turn.

I still prefer the SPY/SPX and Financials overall, but everything is making progress.

Leading Indicators are coming together, they started the week off slow , but continue to add, the most important of which in my view is credit and not just the highly correlated (to market manipulation) HYG, but HY, and JUNK too, they have no correlations to anything that can manipulate the market and HY is skittish because of liquidity issues, the fact they have held up means something as retail doesn't trade credit.

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

Sentiment

 Intraday sentiment is looking up the last two days and this one has been very negative so any positive activity here is notable.

Longer term you can see how our second sentiment asset has acted as a leading indicator on this 10 min chart, going negative at tops before the SPX and positive at bottoms before the SPX, interestingly since the F_O_M_C, while the market has lost ground as we were 100% correct on the knee jerk reaction as well as the negative divergences going in to the F_O_M_C, the interesting thing is that sentiment has held up, this is not retail sentiment.

VIX / VXX correlation

 I saw this popping up yesterday, but as you can see, I inverted the SPX's price action so you can better judge the normal correlation that should exist. VXX has been underperforming that correlation since late morning after the a.m. trade washout was completed.

FX/Currencies-specifically components to the USD/JPY carry trade

 We've been following developments here all week, you can see that the $USD is acting a lot better as the 3C signals were suggesting.

Yen

 The other side of that carry cross is the Yen which needs to underperform , we've had the signals, we now have the price action and right as a.m. trade washes out, this is why a lot of pros won't even trade before 11 a.m. In any case, the carry pair, USD/JPY should provide support to the market and the pair is coming to life.

Yields

 Yields act like a magnet for equity prices, we saw yields moving higher Monday and they have continued to do so, this means the market is dislocated from the natural reversion to the mean.

Credit

 HY credit is a little skittish because of the lower volume, but it has still done a good job as a leading indicator, the question anyone who knows what this chart represents must ask, is why is HY Credit holding up so well vs the market?

There's only 1 good answer in my view, but we need more than just 1 asset.

High Yield Corp. Credit...

 We also have outperformance of HYG all week and then some.

Junk Credit has no correlation to any kind of manipulation or arbitrage scheme, so why is it holding up? Who invests in HY credit as a risk asset? If you answer that question, you answer the first question and the market suddenly takes on a very different dynamic than just price action.

A few examples of some of the averages with some impressive signals...

 5 min DIA

2 min IWM

1 min QQQ

3 min SPY

5 min SPY, recall the positive started showing up very weak on the 23rd, by the 27th it strengthened...

FAS, 3x bull Financials 15 min

XLK (Tech sector) 15 min