We did discuss the possibility of a head fake move above the range before a move lower, that's a concept more than something we have clear signals for and of course the F_E_D event inspired "Knee-jerk" reaction. However, looking at some of the Leading Indicators and especially Credit/HYG, I wouldn't want to be long the market right now.
HYG disconnecting from the SPX today, remember the 15 min negative appeared yesterday suggesting it wasn't a process, but a wholesale dump of HYG right before the minutes.
You can see how HYG is used to move the market as a lever, yesterday was the start of deterioration, today it has fallen out of bed with the normal correlation.
Credit markets are much better informed than equity markets.
And this shows a strong positive in HYG at its lows that sent it higher and a VERY strong leading negative 15 min, all of this damage is from 2-days only.
High Yield Credit which was in line with the SPX has also fallen out of sync with the SPX today.
Sentiment has fallen out...
And as mentioned yesterday, the USD/JPY vs SPX correlation fell apart and Yields took over, that is falling apart today as well.
Yields are one of my favorite Leading Indicators as they tend to pull equity prices toward them so a dislocation like this,
EXACTLY at 2 pm, would be bothersome for me if I had long market exposure.
This shows Yields specifically today falling out right at the release of the minutes at 2 p.m.
HYG's 3C chart though continues to be one of the most disturbingly bearish signals right now.
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