Leading Indicators

Leading Indicators are in line with the market's overall cycle / pivot weakness, we saw some of the initial downside from it yesterday, today we have a little noise, but Leading Indicators are indicating this is what we've been expecting.

 Today we see HYG (High Yield Corporate Credit) which is often used for short term market support/manipulation falling off vs the SPX (green)

The 3C chart of HYG shows distribution which makes perfect sense

This is the longer 10 min HYG chart leading negative as well, the market has a very hard time moving up without HYG support as there's very little organic demand.   In other words, "When smoke and mirrors fail, the market has a difficult time holding its ground and smoke and mirrors are failing".

 This is High Yield Credit, it too is falling off with the SPX, this is important because as the motto goes, "Credit leads, stocks follow".

As far as professional sentiment, the first of our two indicators is showing sentiment falling off vs the SPX.

Our second Sentiment Indicator is clearly falling off, in fact moving nearly straight down vs. the SPX, these are good Leading Sentiment indicators. In other words, pros are moving out.

 VXX/ VIX short term futures (vs SPX with price inverted so you can see the correlation) shows protection being bid, we also have a nice rounding bottom in VXX or reversal process, even though it only pulled back a little bit.

 VXX intraday 3C charts showing accumulation in to the reversal process.

This is migration to longer timeframes in VXX.

 This is the longer term base in VXX 15 min with a huge leading positive divegrence, you can see it recently started to run up and a small pullback today that seems to be building it's short term reversal process.

 Here's TLT, 20+ year Treasuries, we see underperformance and right now as the day proceeeds, outperformance vs inverted SPX prices.

This is a flight to safety trade.

The intraday TLT chart with accumulation, which also looks like a move out of risk assets and in to safety.

Another TLT chart (longer intraday) that shows the negative sending it lower and now a positive in an increased ROC toward the lateral.

Yields intraday had a positive divegrence late yesterday so today's prices make sense, but now it's starting to fail, this is short term only. Longer term...

You can see how Yields in red have led the SPX days in advance in calling trend changes, we have a SIGNIFICANT leading dislocation . Think of Yields this way, they are  like a magnet for equity prices, that would mean they are pressuring the market on the downside as the pivot area progresses.

 This is the 1 min USD/JPY (candlesticks) vs ES ([purple) 1 min, you can see the correlation which drove Index futures lower last night, before reversing around the European open.

However, now that the correlation is reconnecting, we have a longer term disclocation that should revert to the mean.

Here it is, 60 min USD/JPY vs ES, I figure there's somewhere around 60-80 points in ES that need to be wrung out just to revert to where USD/JPY is right now, assuming it didn't move any lower which I think is inevitable.