Last week I put up some charts of HYG, VXX and TLT, taken together they work a a short term manipulation lever called the SPY arbitrage, it's really just fooling some algos in to thinking the market is in a risk on mode with Institutional risk assets up (HYG) and protection or flight to safety assets down (TLT/VXX). Algos, which despite being computers are programmed to follow certain correlations and buy or sell, they are not as smart as you might think.
In any case, after that post I put up this one showing charts I had uncovered in most of these that look like they want to bounce,
NFLX, Z, P, TWTR, PCLN, AAPL, SCTY, TSLA
As I'm thumbing through my watchlists right now I'm writing down the assets that have the same look of a short term bounce with horrible longer term charts that I'd want to short in to, that includes all of the names above.
Then I came to HYG's chart and if there was more liquidity in the options, I'd be putting out an HYG call trade idea, however a short term call trade only, otherwise as an equity long, HYG just doesn't have the profit potential to make it worthwhile, however it is the signals that are telling me the story, take a look.
The 4 hour chart is just as ugly as the Leading Indicator (HYG) which is massively dislocated from the SPX, a strong indication of a market blowout to the downside coming as we haven't seen a dislocation this large likely ever (since we have been using the leading indicators screen/layout).
In other words, HYG's goose is cooked, but that doesn't mean it can't bounce, it would just be sold in to which is why I have no put out many short trades as there hasn't been a decent enough bounce to make the entries worth while and I have been suspecting a bigger bounce is coming (mostly IWM, but HYG/TLT/VXX as well as the watchlist ).
The 60 min chart shows the same theme over and over again across assets, indicators, leading indicators, credit, etc, as of July 1 as soon as Q2 Window Dressing was done, selling has been extremely heavy, you see it here too on the 60 min HYG leading negative divegrence, but short term...
The top is easy to spot, but so is this 5 min leading positive divegrence, it can't begin to compete with the 60 min/ 4 hour leading negatives, but it can bounce and likely all of the assets in momentum names above will do the same as well as the list I'm still compiling to set price alerts for so I know when they have reached a target area I'd consider them shorts.
This is HYG's 3 min chart leading positive which tells me it's likely this move is close, this week. I'm looking at the options available to play a piggy back long aside from the IWM calls already opened, however keep in mind this is the smaller trade of the two it's really an means to an end, the end is the short in to price strength such as the names in last week's post linked above.
i'll add more, but the more I see this the more I think it is worthwhile to participate in, but I wouldn't fault anyone for sitting on the sidelines until these assets are in good shorting position, that's the primary trade.
I'll let you know what I find and what I decide to do as well as a list of assets I'm setting price alerts on for short entry reminder areas.
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