After now breaking out of the range this week, we can say with meanigful certainty that this was a false breakdown in the junk corporate to investment grade corporate bonds ratio. This is a bullish sign from the bond market.
We're going to hear a ton about how high yield isn't making new highs with equities. What matters more in the immediate term (at least to me) is how this ratio handles the orange resistance line and the September high if it gets there. If anything, that might be when the equity rally stalls.
Also note the action in HYG itself. We can go ahead and ignore those bad ticks. It's a bullish consolidation until it's not. Note how the HYG almost always lags SPY when SPY goes up.
I'll be talking more about this as it's likely becoming a day to day thing worth monitoring over the next week or two.
Trade 'em well
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