Apologies for not posting yesterday.

Riskdial +28 and a 2 day over day change of 6 points, not material either way.

While relative moves with the S&P500 have not materially changed recently, internals have.  We previously noted that internals were signaling 0 percentile over the past 15 years in terms of correlations. The first chart shows the reversion to the mean of short term correlations around the .5 mark (note the lower right hand of the chart turn from blue to highlighter yellow).  The second chart shows the day by day look for the past months with my most recent print of the $VIX in pink and then in blue, to the most distant in green.

In general, we do not believe this to be bearish (it is just normal now), and now with the continued expansion of the deviations there is room to the upside with the first deviations band coming in around $319 on the SPY.

We have been writing since the 12th of November that the relative price trend has been weak.  On the second and third of December the Market erased nearly a month of trading gains. That is a characteristic of ultra low internal correlations: Here is a quote from Dr. Steenbarger in a Bloomberg interview from 2017:

“…we tend to get high correlations during
and immediately after periods of market correction, as traders and investors bail out of risk assets and then back into them. At relative price peaks in markets,
especially when volatility has been lower, the average intermarket correlations have been lower. This is a rough look at an important phenomenon, as it captures
portfolio-related decision making across a broad range of assets. Only large institutions can affect these correlations, which makes the average correlation a
useful tool in gauging the sentiment of active money managers.”

We are in Risk On in all model timeframes.

A stock to look at today is SNA (buy on all indicated pullbacks).

There are ~81 stocks with a perfect trend score in the S&P500 today increasing from ~50 two days ago.