We are setting up another visit to the islands in the indexes. We have gapped with no real support below…additionally, it seems likely that we end up setting another island here rather than a fantabulous bounce and rally into the year end. There is a little bit of room for the market if it wants to try to play some pretty challengine resistance. Of note today is the nearly 2% net divergence in the performance of the EMD S&P Midcap 400 futures. These contracts usually outperform significantly, however, as of today they are underperforming by 16 EMD points…that’s 2% of the index in underperfomance and highly unusual. Additionally, the market is fractured on ething is going up while other correlations are going down. To add to this mix, one need only look at all the US Treasuries, they closed near the highs of the day…and most importantly the FIVE YEAR TREASURY broke to a new high (low in yield) and closed at the highs…
