It's not as if we couldn't see it coming in HYG's negative divergence/distribution, but this is quite shocking on the open, obviously a result of the fall-out from OPEC and perhaps a message of the market similar to the first week of October when I mentioned HYG accumulation with the comment, "
There's only one reason to accumulate HYG", that's in order to support the market in a risk on move.
The averages themselves already have quite a bit of dispersion for this early trade...
DIA is up, but not confirming as of yet, I'll check it again in 20 minutes or so.
The SPY 1 min is confirming the negative price action, however as of Wednesday's close, the 3C charts were showing a negative divegrence in to the closing ramp, that seems to have picked up right where it left off on Wednesday's close.
It seemed SPY was in line most of Wednesday, but there's a larger (weaker) relative negative divegrence against the close Wednesday and a specific (stronger) leading negative divergence 3-min in to Friday's ramp/lever pulling close to keep the averages green as everything from the JPY carry to SPY Arbitrage was used, including HYG.
The IWM also showed the same distribution in to Wednesday afternoon's closing hours, especially sharp in to the close 1 min
And on a stronger 5 min chart, Wednesday looks worse than it first appears, a strong leading negative intraday divergence,
it's no wonder there's dispersion this early in the averages.
The QQQ 1 min "looks" to be in line on the open and in an hour it may be, but give it some perspective and...
Not quite.
This is the distribution in HYG I had been talking about early this week and especially Wednesday, it has led to a big gap down in High Yield Corporate Credit / HYG, one of the first levers of defense of the market.
Credit leads, stocks follow..." this may be an interesting day indeed for signals, although the low liquidity and half day make it hard to follow through on Credit's lead so quickly, we'll see how much more damage is done shortly.
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