Junk Bonds Are Sending A Familiar Bearish Messages

By Chris KimbleBondsNov 20, 2018 02:03PM ET

www.investing.com/analysis/junk-bonds-are-sending-a-familiar-bearish-messages-200361164

Junk Bonds Are Sending A Familiar Bearish Messages

By Chris Kimble | Nov 20, 2018 02:03PM ET

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US500

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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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Comments (2)

shark tank Nov 20, 2018 5:02PM ET

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he's now calling the top every day.

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Dante Valerian Nov 20, 2018 2:14PM ET

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You were cheering the "breakout" in August and September across stock markets, giving incredible upward targets.

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Dante Valerian Nov 20, 2018 2:14PM ET

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You even celebrated the September pullback as a "successful backtest." Just the facts.

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Junk Bonds Are Sending A Familiar Bearish Messages

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