HYG (High Yield Credit) and VXX (Short Term VIX Futures)

This is what we saw yesterday morning, it's easy to forget that the overnight session saw ES futures down 10 points by the open as things changed very quickly after the ECB hinted in the WSJ that all options, including ASSETT PURCHASES (read as QE) are on the table, even though their charter expressly forbids them from doing so (there's always a loop hole for an organization run by a Goldman Alumni- Draghi).

HYG moving up helps the arbitrage trade and supports the market and VIX or VIX futures moving down does the same, this is what we saw early yesterday and posted it in the morning, I believe it was, "They are going for the SPY Arbitrage".

So the opposite signal has the opposite effect. TLT is the third asset in this scheme, TLT up is market negative and TLT down is market positive, although the correlation with 20+ year T's has been all over the place lately unlike the 10 year benchmark.

 HYG 5 min chart showing the top rounding with a chimney (via ROC) and the sharp fall after. Then at #2 there was an attempt to accumulate and create a base to support the market, it was nearly complete when it suddenly failed. #3 is the very sharp, "V-like" reversal, this is too tight, I don't trust these to hold long and true to experience...

Here;s another look with an intraday 1 min trend, you can see the accumulation at #1 and the sudden failure as it went negative just as the "U" reversal was nearly done. At #2 we have the much sharper "V" that we were looking at yesterday early in the morning, expecting they were trying to move or support the market.

 This is HYG intraday going negative in to a very FLAT range, a common place to see accumulation or distribution (think VWAP).

And the 3 min chart going positive as mentioned early yesterday and a VERY sharp leading negative divergence this afternoon.

VIX short term futures, I'm using UVXY, some say it tracks better than VXX, but I just haven't been able to rescale VXX yet.

 Since the area in which I first saw the mini cycle divergences around the 7th, there has been positive 3C underlying tone here, despite the VIX getting hammered nearly every day to push the market up or for an EOD ramp.

This VERY sudden and very strong intraday leading divergence is an attention getter.

Something certainly seems to be going on and very quickly between HYG and VXX.

You can see it migrating to the 2 min chart as well

And the 3 min chart, this is the kind of edge I look for, it stands out, jumps off the chart.