Remember I said HYG was seeing 3C support earlier this morning?
Well wouldn't you just know it, apparently to keep the market trending smoothly today the SPY Arbitrage model did note the use of volatility, Rates and HYG (or any combination of them) to push through the 9:45 Chicago PMI, look what happens right after...
The model was as a positive differential vs the SPY, that is until 9:45, I guess if you build enough forward momentum you can crash through the wall that was Chicago PMI as the market didn't seem to notice it one way or the other.
True risk is otherwise seemingly off according to HIO.
HIO vs. the SPX this morning is risk off.
However the liquid HYG (HY Corp. Credit) may not be parallel to the SPX, but is positive on the day.
And while the flight to safety is VERY clear with yields hitting the lows of 2013 yesterday...
Intraday today they aren't so afraid, they are helpful, they are also part of the SPY arbitrage to move the SPY with levers.
However in HY credit where it is much less liquid, no one there is taking the chance, just like HIO, it's risk off.
Now you can see clearly my thinking in a very short term call and slightly longer term put, this market looks like it's being artificially inflated right now, I believe it is for the SPX and DOW all time new high print that will be splashed across newspapers on a 3-day weekend at the EXACT last day of the quarter, when new funds have an opportunity to flow in to the market, in to IRA's, 401ks, Mutual funds, hedge funds and more.
Tinfoil hat?
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