Quick Update

I am putting this out because I can't get the charts and the information out as fast as need be, I'll include the charts after.

The 30-year yield has been probably near 1.0 correlation vs the SPX/market, the kind of correlation we use to see with USD/JPY on a daily basis in which you could wake up, look at USD/JPY and know exactly where Index futures were trading. While there's still a correlation among the carry pairs, it's nothing like those days I'm sure many of you remember and before that it was the EUR/USD. Right now, it's the 30 year yields which move opposite the 30 year Treasury/Bond.

I've already shown you yesterday a stroange divergence on 1 min TLT (20+ year Bond Fund) which was positive as well as a 60 min poisitive, if TLT moves up, 30 year rates move down and the market is correlated to the 30 year rates.

The thing that was odd yesterday was the 1 min and 60 min being positive, but muck in between those timeframes, no migration to longer timeframes. Today the 30 year Treasury futures showed the same divergence on 5 min and 60 min charts, again with little in between. Probably one of the biggest developments today (as Leading Indicators are solidly negative, stronger leading signals than those that we saw before the rally started, which was difficult to convince anyone that the market could actually rally, much less put in this kind of face ripping rally. I commented to a member that it was easier to sell ice-cubes to eskimos that to sell the signals pointing to such a strong rally as everyone and their dog was bearish.

We are at a similar state of disbelief that anything can happen other than the market movong up, even though all of these same traders just 3-4 weeks ago were crying that the market was done, that it would never see an upside move again and the rest were confidently short, dismissing any probability of such a strong move to the upside WHICH IS EXACTLY WHY IT WAS NEEDED.

AS I said, the Leading Indications now are STRONGER than back then, indicating to me that the new lower low after this move that I expected in not only possible, but probable.

It has been the 30 year yield near term that has looked like the best timing indication and while I understand the market not wanting to do much either way (we haven't seen any sharp drops and compared to the mark-up stage of the rally, any gains we've seen over the last week have been anemic beyond headlines much like earlier this year in which bulls celebrated all time new SPX and Dow highs on +0.25% gains. These are the kinds of moves most traders would call a "nothing" or flat day.

In any case, the TLT/30 year Treasury situation is changing as is today's short term HYG support situation. HYG is seeing a worsening leading negative divegrence that's migrating out to longer timeframes while TLT is finally making moves in to longer timeframes and migrating out of the 1 min positive to 5 min charts and all in a single day. This tells me TLT and 30 year Treasuries are getting ready to make a move higher, 30 year rates would move lower and the market's correlation at 1.0 to those rates would follow them lower. In other words, it's looking like the timing indicator short term that I suspected yesterday and today.

We have Non-Farm Payrolls tomorrow morning at 8 a.m., this is one of the most important data points of the month so expect early volatility, I'm not going to wager any guesses as to which way, just remember that pre-market prices have reversed drastically on the cash open, just yesterday in fact.

I'll have more for you shortly with charts, but the most important move in leading indications is the strengthening of TLT 20+ year bonds) as the correlation is what's driving the market.