Market Update, All is not what it seems

Looking at price percentage gains themselves this morning, it looks like our "Week Ahead" forecast is right on, early strength,  but beyond that, rotation out of the Russell 2000 and in to the SPY/QQQ; this is evident from price percentage gains themselves with the IWM under-performing on a relative basis.

However under the covers, things are more interesting than I expected them to be this early, except maybe the IWM.

Lets start with the SPY,

SPY intraday struggling to confirm...

SPY 2 min also showing the same, in fact all the way out to 3 min. This is either an arbitrage reaction intraday to the slight weakness below in EUR/USD or it's selling of price strength, this is the first time since last Monday there has been any price strength available to sell in to in SPY.

The Q's are showing the same thing...

QQQ intraday failing to confirm. Remember what these look like as you'll see the IWM below.

While these are intraday and not really any threat to the forecasted early strength as there's a larger divergence powering this move or gas in the tank, it is indicative of how higher prices are being treated, or possibly the correlation, but I suspected the former over the later.

The intraday NYSE TICK reveals breadth is nowhere as strong as you'd expect for the price percentage gains of 1%.

While not horrible on the downside of TICK at -500, the upside has only made a couple of brief forays into the +1000 zone which is the low end of extreme, in other words, not very impressive.

Last week there was a high, high degree of cross asset correlation and it's here this week too.

The recent slowing down of momentum can obviously be attributed to one of those assets, the EUR/USD...

 intraday 1 min EUR/USD with a negative divegrence and the correlation with Index futures (ES)...

You can see EUR/USD vs ES (purple) has had some effect on recent momentum and 3C intraday signals.

HYG, the ramping lever which does have some gas in the tank and could lend some support, thus far has not.

While the area at the white arrow may provide some intraday support, thus far HYG is red on the day. I would expect HYG to diverge from the averages first as it has done, but I wouldn't have expected it so early.

As for rotation, well you can probably see the IWM or Russell 2000 futures are struggling beyond the price divergence with SPX/NDX...

 This is the intraday TF/R2K futures 3C chart, compare to the ES/SPX futures below...

Looks a lot weaker than ES doesn't it, this is likely the rotation taking place.

And the IWM intraday as I mentioned to remember what the other averages look like intraday...

IWM 1 min intraday looks much worse than just non-confirmation and some slight distribution in SPY and QQQ, this looks like it could turn down as I have suspected and rotate out, it allowed higher prices to be old in to last week, it may be the SPY and QQQ's turn with IWM actually diverging beyond relative performance and actually in to the red. If that's the case, then there are some positions I'd like to get set up early in IWM.

I'm looking at more cross asset correlation as that was where we found the most revealing signals last week, really toward the end of the week, but it looks to be carrying through to this week as well. Take a look around at other assets, even loosely correlated or seemingly connected ones, I think you might be surprised how much information they are willing to share if you just look.