High Yield Corp Bonds are again flashing a warning for SPY
Another sign of caution for equity prices is the rolling over of High Yield Corp Bonds (HYG). The price of HYG does tend to alert us to the time when investors are pulling money off the table in the markets and cashing in their chips. It's not a perfect indicator, but it is an indicator that I watch, amongst many others. I have noted that IWM (Russell 2000 Index) has failed to hit a new high also, which gave us a good signal to short two times so far this year.
Note how HYG is just sliding slower at a steady pace. Clearly, investors piling into the USDollar are NOT buying High Yield Corporates, but if they are, it means that existing investors are swamping them with more supply than they can handle. In either case, this is a warning sign to pay attention to.
When this "log rolls over", there could be some fireworks.
I'll put "buy on HYG" and "sell on SPY" here.
Tim
Note how HYG is just sliding slower at a steady pace. Clearly, investors piling into the USDollar are NOT buying High Yield Corporates, but if they are, it means that existing investors are swamping them with more supply than they can handle. In either case, this is a warning sign to pay attention to.
When this "log rolls over", there could be some fireworks.
I'll put "buy on HYG" and "sell on SPY" here.
Tim
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