Opening Indications

On the heels of overnight geo-political calming (although yesterday's slightly hotter geo-political events didn't effect the market as the talking heads would have you believe in their 30-second sound bites) with an Israel/Gaza truce extended, Maliki in Baghdad being rejected by his own party, the US, Iran and the top Shi'ite cleric his situation is looking untenable and now with the Russian "aide" convoy allowed to come in to Ukraine again after about 4 or 5 on and offs over the last several days, the market should be flying this morning rather than giving up most overnight gains.

The bad news is good news narrative didn't seem to work either. The Eurozone Q2 revision out today shows Germany contracted slightly more than expected, France stayed put, but missed expectations of a slightly higher print, all in all it wasn't an earth shattering GDP revision (Spain did notably outperform and we already know Italy has entered its 3rd recession since Lehman). Yet,  German Bunds (Benchmark EGB's specifically) hit a record all time low yield of 1.0% so deep pockets are on the flight to safety trail which is what we observed yesterday with the market risk on and the bond market risk off.

Today that correlation is even stretched further as Initial Claims missed by 316k and up 21k with continuing claims also missing now for the 6th of 7 prints. Gold briefly popped above $1320 and Treasuries... well they are at new cycle lows.

If you thought yesterday's stock/bond divergence was interesting, today's is a bit closer to spectacular.

 5 year (red) divergence in yield vs the SPY yesterday and so far today...

Quite a difference.

The 10 year dropped significantly on the open to 2.39%

As did the 30 year so while the market attempts a risk on bounce, the bond market is in flight to safety mode and this wasn't a result of just the Initial Claims print, this is a trend that like yesterday, has been on most of the overnight session in Treasury futures.

This morning's short squeeze attempt was very weak...

TICK barely broke 500 on the open.

On top of all of that, while the intraday charts seem to try to prop up the market and HYG is obviously being used to the same effect, we have stuff like this just under the surface...

SPY 5 min chart breakdown which is a problem as the base/positive divegrence for SPY is only at 15 min, it won't take much to migrate and turn that chart at which time our "bounce" will effectively be over and we start the next leg.

For the Q's it's even worse as the 5 min chart yesterday fell off a cliff and the base/positive divergence is only at the 10 min chart, that's just 1 timeframe over.

My gut feeling is that they'll try to hold the market a bit longer in the area, but it's time to start looking through the short list and see if anything is starting to stand out.

Other than 3C I'd be watching for early hints in TICK intraday and HY Credit on a larger scale,

I'll have more shortly after I poke around some watchlists for a bit. Obviously with the very flat performance thus far today, Patience was the right course to choose rather than be slowly fed through the meat grinder.