Participants are under stress. Pretty much, the only way I can see markets of making progress to a significant high (if it is not already in) is for some event-driven trigger. Yesterday's and I am highly confident today's, daily market structure projection (MSP) have not tracked. I am quite happy to see this but would like to point out a few things about what is occurring. Usually, daily MSP is mismatched for one day at a time only. We already have two here. This does NOT mean the algorithm is wrong, what it means is that the capacity for the market to support normal market structure is being compromised. This also occurred yesterday with the intraday MSP. The reasons for this are that market participants are usually hesitant, under duress, confused or in some way to carry out normal activity. Possibly the bond stress, especially, European, of which European central banks have been the primary influences has begun to take a toll and reduced their capacity to carry out normal central bank activity.
Today's Daily MSP is salvageable...but that appears like it would need a rather large move to make it happen, and it's not very likely at this point...could still occur. Either way today and yesterday saw a significant decline in market structure quality...best to be careful.
Market structure represents exactly what it sounds like it is - a structural component to market activity and capital flows. When the market becomes particularly noisy, as it has been lately, that can be a sign that market cohesion is breaking down. This implies that larger market participants are changing their actions, and possibly minds/policies.
Often seeing people's actions change and a break from their patterned behavior occurs before a large move. So, the message from market structure when it has been very accurate and then struggles, is that the consciousness of the market may be going through a modification. Resolution usually has two types of outcomes: an acceleration of a current move or a reversal.
However, sloppy market action and unstructured behavior is very useful information. It's important to note these tools represent PROBABLISTIC ANALYSIS, not a crystal ball. However, when one knows a bit about the probabilities and the markets do not behave in line with those expectations that is highly useful information.
The debt market activity in Europe can create real structural bifurcation and is very significant. Hence the picture on our masthead the last few days. IF we are lucky enough to get news/event driven Follow on high - MSP is suggesting it will be a lasting high.