{"id":22209,"date":"2024-10-11T07:30:20","date_gmt":"2024-10-11T11:30:20","guid":{"rendered":""},"modified":"2024-10-11T07:30:20","modified_gmt":"2024-10-11T11:30:20","slug":"junk-bonds-are-signaling-a-bearish-move","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/junk-bonds-are-signaling-a-bearish-move\/","title":{"rendered":"Junk Bonds Are Signaling a Bearish Move"},"content":{"rendered":"

Junk bonds may be signaling an end to the stock market rally.<\/p>\n

High-yield corporate bonds have been steady performers this year. The iShares iBoxx High Yield Corporate Bond ETF (HYG) traded at its highest price ever last month. <\/p>\n

And, since the action in junk bonds tends to lead the action in the broad stock market, we didn’t have to worry too much about a stock market decline.<\/p>\n

In fact, it was just one month ago – while the S&P 500 was selling off in a sharp decline to kick off September – when we suggested it was too early<\/a> to be betting on a stock market crash.<\/p>\n

HYG was acting well. And, as long as it continued to do so, the broad stock market should hold up just fine.<\/p>\n

Now though, the picture has changed.<\/p>\n

Take a look at this updated chart of HYG…<\/p>\n

\"chart\"<\/p>\n

(Click here to expand image)<\/a><\/p>\n

HYG has been declining for the past two weeks. It’s now trading below its 9- and 20-day exponential moving averages. And those moving averages are starting to turn down – indicating a more significant decline may be in the making.<\/p>\n

This is a notable divergence to the action in the stock market, where the S&P 500 has been making new highs.<\/p>\n

As we’ve noted many times here in Market Minute<\/em>, high-yield bonds are a leading indicator for the stock market. HYG tends to lead the action in the S&P 500 by anywhere from two days to two weeks.<\/p>\n\n\n\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When junk bonds are rallying, it’s a risk-on environment. That tends to be bullish for stock prices.<\/p>\n

When high-yield bonds are falling, investors are in a risk-off mode. That’s bearish.<\/p>\n

Since HYG has been declining for about two weeks, the action suggests we are entering a risk-off environment. A further decline in HYG is likely to start pulling down the stock market.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark
\nEditor, Market Minute<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Junk bonds may be signaling an end to the stock market rally.<\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-22209","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22209","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=22209"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/22209\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=22209"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=22209"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=22209"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=22209"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=22209"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=22209"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=22209"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}