Market Update

The lateral chop and increased volatility is continuing off Tuesday's deeply oversold 1-day condition , the day 9 of 9 S&P groups were red, only 17 of 239 Morningstar groups were green, the strong Dominant P/V relationship that suggested bounce at least the next day.

Yesterday's P/V relationship suggested deterioration in to yesterday's bounce from Tuesday's new cycle lows with Price Up/Close down, the most bearish of the 4 configurations and breadth returned to normal in S&P and Morningstar sectors, the actual breadth internals made no gains whatsoever, just treaded water looking exactly like what I suspect this is , just a work off of the deeply oversold condition from Tuesday.

As far as today, the only things of interest really are HYG's divergence and what's going to happen with carry trade correlations.

 Part of the reason Treasury Yields may not be very correlated to the USD/JPY may be because BOJ governor Kuroda pulled a Greenspan on speed with comments that QE was likely and then there's no need for additional QE sending USD/JPY in to a tizzy trying to keep up with all of the contradictions from the central bankers mouth today.

The 10 and 30 year yields vs USD/JPY had some early correlation, but have lost that as the day and Kuroda's comments carried on.

The AUD/JPY which has been the correlation for ES is on its back and seems to have nothing to do with Es/SPX futures today.

HYG intraday is following the SPX broadly, but recall the HYG 3 min positive divegrence and nearly 2 days of flat range rather than downtrend. It remains to be seen if this old lever can pull anything off to support the market for another day or so.

 The probabilities though, whatever the short term outcome is, are firmly set with HYG having led the market and continuing to do so, a 1-day bounce isn't going to change this map.

 Pro sentiment has also gone negative over the last 2 weeks.

Intraday it's in line with the SPY, but again this is just like treading water, it's not leading, the bigger picture/probabilities are firmly anchored.

The intraday breadth has improved today in the TICK, I doubt ti will move breadth charts we look at after market as they failed to yesterday.

Very near term intraday that intraday breadth is losing momentum as it is falling out of the channel. I was thinking maybe HYG's divegrence was there to hit SPX 2000, but seeing breadth fall so easily and make no gains whatsoever yesterday isn't that inspiring, not that SPX 2000 is a monumental challenge from here, only about 5.25 points.

 intraday in the averages it is as if they are in live suspension, almost nothing going on, a slightly negative intraday chart.

The Q's look a bit better, closer to in line and the QQQ bellwether tmeframe...

 5 min is firmly anchored leading negative, but not adding to that as of now, so it's in the suspension expected Tuesday after seeing how oversold the market was on a 1-day basis, which is why I warned Tuesday night that we'd likely see better prices than Tuesday which was getting ugly, but not to become complacent because Tuesday was nothing compared to a stage 4 move, look at HYG for evidence.

 The IWM 1 min is in line and its bellwether chart..

10 min is firmly fixed leading negative, but also not showing significant intraday distribution, again there needs to be something to get buyers buying and fumbling around in the middle of a choppy range usually isn't going to do it.

So we wait to see if HYG can come through and keep looking at assets for longer term position entries.