Macro Leading Indicators Fallen Apart

Note I said, "Fallen" rather than "Falling". Earlier in the week I posted Market Breadth charts which where a horrendouns mess, here's an update on Leading Indicators.one of the most notable signals is the decline in High Yield Credit as it is the Institutional equivilent of a momentum stocks. These kinds of signals are what we first started using the Leading Indicators layout for in the first place, not small day to day moves, but larger macro trends.

 High Yield Corp. Credit, the trend in this often used lever to ramp the market has clearly fallen out with the market, not on a short term dislocation, this is a massive unwind of Risk on/ High Yield institutional positions.

This is HYG intraday, I was surprised it didn't help ramp the market this week, but with my expectations for the IWM with a move below local support...

And with a short term volume event intraday in HYG, this may bounce to help lift the Russell 2000, but this is not a trend that HYG is likely to recover from, which tells us something, as the saying goes, "Credit leads, stocks follow".

The same is being seen in high Yielding Junk bonds/Credit intraday as well as...

A longer term massive dislocation from the SPX, this is telling us institutional money is moving out of the last of their risk exposure. If you look at the charts close, you'll notice the most serious part of the decline started July 1st, the first trading day after Q2 Window Dressing ended which should tell you something about the myth smart money creates for their clients about their positions and the reality that they move back to as soon as the quarter (reporting period) ends.

 Closer to home on the timing front (even though these too are massively dislocated), professional sentiment is turning south on this week's bounce.

 This is our second institutional sentiment indicator, there's a clear transition from confirmation of the bounce early on this week to outright selling.

Again, the NASDAQ Composite (all NDX listed stocks) is not only seriously dislocated on the Advance / Decline line, but even more sharply recently, much like the breadth indicators I posted Tuesday night.

This should really have you thinking very seriously about the composition of your portfolio at this point.