It is interesting to see that both the 10- and the 20-Year Treasuries show a negative divergence (investors expecting higher rates or QE unwinding language) while the US$ is still weak (investors expecting lower rates and no QE unwind.)
We will know soon enough.
What was interesting yesterday was the market move ahead of the AMZN announcement that it will stage a frontal assault against standard general retailers through its newly acquired Whole Foods Market chain.
The 20DMF was very weak before the AMZN announcement, which then dragged the general market lower.
As a matter of fact, the morning weakness was not linked to AMZN at all. It is mostly coincidental that AMZN's announcement occurred at the same time that the market pulled back, at around 11:30.
WMT and SFM only tanked starting at 13:40.
The morning weakness had probably other origins, such as rumor regarding the US administration or budgetary issues.
Anyway, the Retail group reversed back down, pulled down by discount chains and grocery stores.
The NQ8 sector was slightly weaker, but the small caps were basically flat.
Conclusions:
Small caps have been outperforming in the past few days. This tells us that shorting small caps at the top of the IWM/SPY ratio could be interesting again.
The stage is set for the annual central bankers' performance on how best to apply lipstick while still feeding the pig.
