This is an obvious message, SPX new highs didn't pull in volume so Dow all time , nice round $15k comes along, it would seem the idea is clear, millions in free nightly news advertising, the longs come scurrying in, however all is not well and those in the know are not walking for the exits, they're running.
Take a look at really the only 3 assets you need to judge Institutional willingness to take risk, Institutional fear that causes them to hedge and buy downside protection and institutional fear that causes them to abandon risk completely and go defensive, here's an overview of the 3 assets, although you saw them in the last post and their price relative performance vs. the SPX, however there's a lot we can tell that is not obvious in price alone so lets take a look.
The obvious question is, "If Dow $15k is suppose to bring new investors in to the market, why didn't the multitude of SPX new highs (although Dow 15k sounds better) and the more important question, why are the professionals running away from risk? They aren't even hanging around for a little bit?"
First TLT, Long Term Treasuries or the "Flight to Safety", you may recall the CNBC "Rotation out of bonds" that never happened.
This is a longer term chart, there was large accumulation of the safe haven asset early in the year, from there, there was too much accumulation and that sends prices higher. Several weeks ago we saw short term 5 min or so TLT charts going negative, there were some gaps so I assumed they were going to move down to the gaps, but it seems it's been used more as support for the recent market shenanigans, a lower TLT supports a higher market. This is the long term view of that pull;back, but remember that new divergences, such as one that would reverse this, start on the fastest timeframes first and migrate through the longer timeframes.
Starting at the 2 min timeframe, there's been aggressive accumulation the last several days, more than usual.
This is the 3 min chart showing the same so we have migration through the timeframes, not only that, but we have price supporting itself when the correlation should drive TLT lower without any manipulation, this is real demand. I wrote an article about this probably 3 weeks ago as I saw it in both VXX and TLT and it was one of the rare occasions I have seen real demand, meaning real support via the supply/demand mechanism which is driven, especially in this case by fear.
High Yield Corp. Credit. HYG
Since banks have been selling their credit exposure since 2008, it's increasingly difficult for institutional money to put on a true "Risk on" credit position, that's why HYG which is extremely liquid is their choice to express a risk on position, but look at their recent underlying trade in HYG, it's anything but risk on.
The 15 min chart with an enormous leading negative divergence and right in a flat area of trade as HYG refuses to follow the SPX higher.
This is a 15 min leading negative divergence close up, look at the distribution and urgency in this area, they are not walking, but running for the exits. Where's the money going? Look above at TLT.
10 min HYG, again the concept of migration of the divergence and more heavy distribution in this flat area of the last week or so.
If you want to see a waterfall sell-off in 3C, just look at the intraday chart, that's showing intense distribution along the lines of the 10-15 min charts.
The VIX
With the market closing up today up to nearly +.80% (IWM) except for the NASDAQ 100 down 0.10%- (how is that confirmation?)
Why in the world would the VIX be closing green? It's the same reason we see accumulation in VIX Futures, there's a flight to protection by bidding VIX Futures higher.
VXX-Short Term VIX Futures
On the 3 min chart we see huge leading positive divergences the last several days, this is on top of already fairly large ones seen in the trend by zooming out.
The long term trend on the 30 min chart has shown an aggressive bid for protection in VIX futures almost all year. Remember when the VIX was making 7 year new lows not too long ago? You ever wonder why the VIX isn't at new lows with the DOW and SPX at new highs? It's demand for protection.
Just as confirmation I used the leveraged UVXY as well as I usually do, the 10 min chart here is insane.
Here's a closer look at the 10 min chart, just look at the flow of funds the last few days.
Here's the 2 min chart showing intraday movement, also very strong accumulation.
XIV ix the inverse or opposite of VXX, I use it to for confirmation, it should have the opposite 3C signal, the 3 min chart here is quite obviously the opposite with huge distribution.
Why in the world would the VIX be closing green? It's the same reason we see accumulation in VIX Futures, there's a flight to protection by bidding VIX Futures higher.
