Market Update/Week Ahead

There's still a very knee jerk look and lack of risk on in the group/s you'd expect it most. Charts are very fluid, but there are a few trends since this Greek deal in which it "appears" from a cursory glance at the proposal, that Greece essentially caved in on just about everything and a few bones were thrown their way such as Troika being replaced with "institutions", I don't think this plays well back at home for Syriza. As far as I can tell, other than changing some language, we have essentially the same Greek situation we had before Syriza took control, being they control parliament and are a group of loosely woven idealists, Tsipras may have some trouble with parliament who believed in what they were doing, as unrealistic as it may have been.

We'll see about that in the next hours and days.


I don't think this changes anything about where we are in the cycle and our expectations for a downside pivot in to next week.

Right now, I'm almost expecting a large volume surge, a kind of  exhaustion event.

 Earlier today our custom SPX:RUT Ratio was in line with the SPX movements, but in the afternoon it diverges substantially, this is a reflection of the lack of "Risk on" in the IWM which should lead risk vs the SPX.

This shows HY Credit and the typical signals we look for such as the former top and a leading divegrence with the same now, but I'm using this as an example, although it is material, I want to show the intraday chart.

 This is the cycle which is relevant too as HY Credit diverges with the SPX, a leading signal.

 However it's the intraday chart as HY credit as seen in the other charts, is a risk asset and should move with risk assets, although it tends to lead, no such movement today vs the SPX.

Although commodities are getting what we expected such as oil and gold, they too which have been behaving as a risk asset are not in a risk on mode here today or in broader terms.

 Interestingly, TLT which yesterday we were looking for a bottom in, did pullback, but in to a positive divegrence keeping it's bottom intact.

 And the SPY intraday

QQQ

And IWM with longer charts since the Greek announcement showing worse signals.

IWM

XLF rotated in today as we were expecting, whether it was Greece alone or it would have happened regardless.

And FAZ accumulating the lows.