For instance, last Friday summarizing expectations for this week's price action and price forecast, I posted...Friday afternoon's The Week Ahead:
"I suspect the market is far too weak to stage a breakout, even a head fake -failed breakout without some help from the market levers. "
I suspected a lot of that help would come temporarily from whatever levers could be used, NYG being one of the main ones, especially how it closed, but I didn't think HYG would hang around long and it would start to lead the market lower as it has led it laterally in advance, over a week at both the base and the reversal/topping process.
From Friday afternoon's, The Week Ahead:
"Barring an geo-political sparks starting WW3 over the long weekend, the week ahead looks exactly as I've expected to be the highest probability all week and as a concept in general, a head fake move"
So nothing changed from the reversal process of last week, the move from up to lateral trade led by the market manipulation lever HYG, right after the Week Ahead post I posted Leading Indicators to show some of the short term levers and some of the very broken action.
From Friday afternoon's Leading Indicators:
"First, probably the most important of the Leading Indicators and the predictable instigator and support mechanism of the market from early August, HYG.
Clearly HYG wasn't supportive of the market at all, that is until the close (FRIDAY). Look at HYG in to the close and the SPX, that's not an accident and it fits well with the The Week Ahead post which is the same thing I've thought all week."
This is HYG pumping the market in to Friday's close, it was a small divergence, but I thought it would last at least until Tuesday morning.
I suspect if this were going to be a longer/stronger divegrence, it wouldn't have started upward toward the close, but rather stayed in the area and continue to accumulate.
As I said with the SPY in the Week Ahead, the roof on the move is at the 5 min chart which is not positive, but leading negative, that's the same situation for HYG ...
I showed you the trouble HYG is in, HYG As A Leading Indicator, I suspect HYG will give out first and lead the market lower in to stage 4, I just don't think anyone will be wanting to hold HY credit so close to a decline.
So far this morning, it has turned out HYG Credit was early to give out despite the late day pump Friday.
Here's HYG on the open this morning...
While it's too early to say if the divergence there started late Friday , but also ended late Friday will try to pice back together some support later, for now it has done exactly what was expected in so far as being a leading indicator and the first to drop as it has led the market through all of August from the market's base to the rally to the turn sideways, lateral reversal process and now to the downside. As I said, no one is going to be wanting to hold HY Credit when things go south.
...This is the August rally and even with today's move, HYG is still very much in a reversal process, the 9th day of lateral trade", the Trend Channel for all of the averages for the August move stopped out, , trouble with VWAP and trends turning lateral, short term yields which tend to act as a leading indicator which are diverging negatively from the market after having held in line for weeks on an intraday basis, but still being very divergent on a longer term basis even for August, such as this chart from Friday's Leading Indicators."
5-year yields on a longer term basis, dislocated from SPX (green).
And finished with an overall assessment,
"All in all, it looks like the same concept we see about 80% of the time is going to play out again as we have maintained all week.
Not that I subscribe to any of this as I have shot down these fractal correlations and Hindenburg Omens numerous times as I feel each market is different even though I may agree with the end result, but the 1929 high was the day after Labor Day which is coming up Monday, again, just an interesting aside."
From overnight, the USD/JPY suddenly became the ramp vehicle, although it actually started late last week.
And here's the USD/JPY v. ES (purple ) for the new week in futures doing what it was meant to do.
However this is what ES looked like pre-market going in to the open.
At new highs, it already had a 3C negative divegrence in pre-market which turned in to this on the open and currently.
ES after the cash open, the negative divegrence fired off and sent ES lower.
Gold and silver were both whacked, which is the longer term pullback we've had signals for, but this looks like something else entirely, we'll take a look as charts start to mature after the a.m. burn off.
We're off to an interesting start, not everything is what it seems when the cash market opens, but so far from HYG's movement, we're already on schedule and ahead of schedule for the week ahead, at least for now.
I'll have some A.M. opening indication charts up shortly.
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