We can see below that the 10Y Treasuries were sold on the announcement, but recovered as I believe that the Fed and the Boj stepped in to avoid a complete crash. Instability in the US fixed income markets is not something that central banks are taking lightly. However, if the Fed really continue the QE unwind policy, then how can rates not shoot higher especially if one of the largest buyer decided to stop buying.
This is the reason why the whole equities income assets continued to be under pressure yesterday.
On the other hand, NQ8 and the S&P500 did not weaken much.
Did not notice that the Cumulative Tick was very weak yesterday?
As a matter of fact, the Cumulative Tick is a poor indicator regarding how the large caps will evolve. We can see below that in the recent past, Cumulative Tick weakness was not an early sign of a coming SPY weakness.
The Cumulative Tick however shows better correlation to the small caps.
The small caps continued to be weak yesterday.
You will note that the retail group shows a positive money flow, simply because there are quite a few very large retail stocks (AMZN for example,) which attract good money.
Conclusions:
Same as yesterday: I would short the small caps being however aware that they are prone to waves of short squeezes.
I am now short NLSN, BKE and LB, but also TNA.
