Junk is breaking down.
Junk vs. Treasury and Investment Grade is weakening today, not furthering yesterday’s upside momentum.
The above show a chink in the armor of the risk ‘on’ trade as the market re-thinks Trump mania. Not coincidentally, SPX is being resisted right at the bull doorway we have been discussing, the 2160 area.
Also Semiconductors and Nasdaq 100 continue their negative divergences to the SPX and Dow, I suppose because Trump says they should make everything in the US, not Asia. Tune that stuff out, it’s hype. Not saying these will go bullish, but I am saying that the Trump stuff is not material right now, if it ever will be.
Small Caps are still strong, and a risk ‘on’ indicator.
Silver-Gold and Palladium-Gold continue to be in line with an inflationary and/or risk ‘on’ backdrop in the very short-term at least.
But items like Asia and Emerging are still dropping. I am interested in AAXJ especially, but not just yet.
Much more to come, and I don’t have any real conclusion here other than to show you some pictures of a market at odds with itself in some ways. I guess that is to be expected, given the mass emotion in play now. One concern I do have in that regard is that the VIX got destroyed on the euphoria, all the way back to trend. It begs caution on the whole shootin’ match in that people went from manic fear to comatose comfort in a nanosecond.
I’ll try to save in depth commentary for the weekend report because I don’t want to contribute to other stimuli that may already be making your head spin. Questions are welcome, of course.