High Yield Corp. Credit (HYG)

I talked about this asset a lot the last several days because it's one of the most important signals right now, the market is broken, it's like a child's tooth just barely hanging on, HYG is an asset that can basically help us narrow down "When the tooth drops".

Take a look at what we have, especially from where we have come. From what I've already shown you, HYG was not being used as a mass, "Risk on" asset, I'm sure some used it as a trading tool, but the majority of the money was long gone, that means it was used more of an arbitrage asset to HELP the market on the upside as the market didn't have enough of its own juice. The SPY Arbitrage is a quick, dirty way of seeing when these assets are being used as market levers, but just looking at the 3 (HYG, TLT and VXX), you can get a good feel for when they are being deployed, as I said last night, the abandonment of HYG positions, even small ones will be a key timing indicator, even more so in the thinner markets of High Yield credit.

 HYG with simple momentum indicators has the gentle roll that would be consistent with a topping process, typically a bit more stretched out than the averages in a case like this because HYG is the cause and the averages are the effect.

Even with simple ROC on price, MACD (26/52/9) and RSI (6), the negative divergences can be seen, by the way, MACD divergences or RSI or Stochastics divergences are typically the best use of the indicators no matter how they are most commonly used, for MACD, there are typically 3 parts to the divergence for a solid signal as you see above. This is just a simple momentum screen, but the point is the change in character, changes in character precede changes in trend.

 This is the late day HYG intraday negative I posted yesterday, even though a 1 min chart it was a big deal. why? Because HYG is only supported by 1,2 and 3 min charts, the rest have left town.

 HYG 5 min in a flat range.

HYG 10 min

The larger mass migration out of HYG a while back on the 15 min'

And the 30 min.

This is one of the key assets to be watching for market character, health and timing (health is used VERY loosely and very short term)