HYG CONTINUED DISTRIBUTION

Last week I mentioned a positive 1-day divergence I saw in HYG and that it was a bit bothersome for me, although a 1-day divergence isn't much gas in the tank, it was enough to send HYG higher in support of the market while the VIX was blatantly slammed 3 times two days virtually consecutively. In other words the market needed help via the VIX slams, but HYG was more of a mystery being credit is a sophisticated marekt, it is hard to say whether HYG was there in support of the market which I tend to doubt, or on a leak of Central bank news whether it be ECB (again which I doubt) or the "Surprise" China's PBoC rate cut (which I suspect).

In any case, since Friday there have been clear distribution/negative 3C divergences in HYG, today that continues and HYG just moved in to the red. Beyond whatever HYG was originally accumulated for over a short period, thus expecting a short move, it's support for the market looks to be about to be completely kicked out from below the market. This taken with increasingly positive VXX/UVXY charts, essentially down to the 1 min timing chart for the last positive divegrence with a VIX buy signal and Bollinger Band squeeze, the action in HYG may be a lot more telling than just the unwind of a quick leaked trade.

While HYG's original positive divegrence on the lows/ intraday rounding bottom of 11/19 are not completely unwound yet, this certainly doesn't look like support for HYG as I'd say it is quickly being unwound.

HYG intraday leading negative and going red on the day.