Credit Breaking or Head Faking?

You might recall my preoccupation with credit and specifically HYG (High Yield Corp. Credit). Last night I talked about HYG quite a bit and posted more charts of it than any other asset.

For one, Credit typically leads and stocks follow, for two, HYG is an arbitrage asset that has been used recently to prop the market up, this is why HY Credit is so important to me right now.

From last night's post.... HYG was mentioned 20 times!

"This is a 1 min intraday chart of the SPY today, HYG (Credit) has been VERY interesting as it seems to be the sole leg the market stands on,"

" The other interesting part is the 5 min HYG positive, but there's no sign at all on the next timeframe of 10 mins, in fact it's quite ugly."

You can check out the post for all of the details and mysteries of credit recently, now you can add this to them...

 HYG's 10 min chart that I said above (from last night) looks quite ugly and 3C led HYG as well as the market lower from these highs.

The range is what is interesting because the 5 min chart "looks" like it is set to send HYG and the market higher, albeit briefly as the 10 min above is stronger and much more negative.

This is a close up of HYG's intraday close yesterday and this morning's plunge lower, with a range like this (just as I explained with regard to VXX yesterday), we almost always see a head fake move before a break out, so whether this is a head fake or a real break down is the interesting question.

Other forms of HY credit haven't been acting as well as HYG, but they are not arbitrage assets so they'd act as they are meant to with no manipulative interference to support the market.

 Junk Credit which usually trades EXACTLY like HYG has been acting worse lately and also broke lower this morning.

HY credit has held support for 4 days and just broke it this morning.

This will be a VERY interesting development to watch as the credit markets are much better informed than the equity markets.