Is a simple ratio of Risky Bonds vs Safe Bonds
IF this ratio is declining, risk is getting punished.
Note how the stock market goes sideways if this ratio is declining.
Siamese Twins Here as Banks De-Leverage from 2007-2010.
Since then if HYG/TLT is declining - the stock market is is flat over extended periods of time. Note the red arrows marked "SPY SIDEWAYS".
Recently, there is a similar price pattern in this ratio to the low in 2012. The Ratio made a with a strong reversal off of the bottom (note the yellow circle) and then a drop again after that bounce, which we are in now.
Look for HYG to turn up relative to TLT in the coming days and weeks as a sign that the stock market can build the chance for a rally. For now, there is no signal. Rather, it is mirroring the last bottom from the summer of 2012.
3:16PM EST Sep 23, 2015