Market Omen or the First Causaulty of HFT Hunt?

On the open we had an unusual event.

Many times we've talked about the SPY arbitrage which is a market manipulating (short term) lever using 3 assets, HYG, VXX and TLT, however I have also showed you numerous times that HYG (High Yield Corporate Credit which is almost exclusively traded by smart money and their algo (HFT) following hordes, is often used by itself to signal a "Risk on" sentiment in the market among institutional money even if that's not the case, AS I SAID, IT'S A LEVER.

The idea is when HYG (HY Credit) is up, algos (HFTs) read that as smart money taking a risk on position and the algos are programmed to buy stocks as they think smart money is in a bullish mood, this is why HYG is used so often to push the market higher when the market doesn't have enough sentiment/demand to push itself, they simply move 1 asset (HYG) instead of buying up all the most heavily weighted stocks in each market average to push the market and the HFT algos do the rest.

This is what the February Rally in SPY looked like with HYG as a comparison in red...

 This is HYG in red during the Feb. rally, at the stage 3 top HYG is falling off as a leading indicator.

If you are wondering which came first, HYG or the market, in almost all circumstances, HYG leads the market.

This is this morning's open , SPY in green, HYG in red, last night I mentioned that HYG was pumped a bit with several other assets toward the close to help the market, after the close the whole FBI/HFT thing came out so this morning's HYG open is VERY interesting.

Remember, I've been showing distribution in HYG for well over a week as it has been used as a lever, letting us know as I said yesterday, "It's not going to be able to hold much longer.

I'm sure Goldman didn't just decide to go on an anti-HFT crusade yesterday and called the FBI at the close, this is something that must have been in the works for quite a while, therefore it's an interesting question, "Who has been doing the distributing?" Especially since any Wall St. firm would know the HYG game, at least a GS would certainly know as they are likely one of the biggest players of the game.

And here's the trend of distribution in HYG I have been showing and talking about on a daily basis.

Either this is a leading indication that is NOT a good sign for the market, or a few HFT's just shut down their HY Credit arbitrage systems.

Either way, I don't see how this is good for the market as far as price and ability to hold in stage 3, it would be great as far as a more open market over the long haul.