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Junk Bonds Are Sending A Familiar Bearish Messages

ByChris Kimble
Published 11/20/2018, 02:03 PM
US500
1.05%
PHDAX
-0.12%

S&P 500 Vs. PIMCO High Yield A

This chart looks at junk-bond fund PHDAX and the S&P 500 over the past 25 years. Junk bonds sent bearish messages before stocks peaked in 2000 and 2007. Bearish divergences took place for 24 months in 2000 and for 7 months in 2007, prior to stocks peaking and turning much lower.

Junk bonds have been sending a bearish message to stocks for the past 16 months, as another bearish divergence has been taking place.

Junk bonds and the S&P 500 are currently testing 9-year rising support. If both break below 9-year support, they would be suggesting that a long-term low in stocks is not in play.

Are junk bonds sending an important message as they did in 2000 and 2007 or will it be different this time?

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Latest comments

shark tankNov 21, 2018, 03:02
he's now calling the top every day.
Dante ValerianNov 21, 2018, 00:14
You were cheering the "breakout" in August and September across stock markets, giving incredible upward targets.
Dante ValerianNov 21, 2018, 00:15
You even celebrated the September pullback as a "successful backtest." Just the facts.
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