Are junk bonds sending a rare bullish message to stocks of late? They are giving it a try!

This chart compares Pimco Junk Bond Fund (PHDAX) with the S&P 500 over the past few years.

Looking back to last fall, Junk Bonds and the S&P 500 both peaked at the same time.

Around Christmas, Junk bonds and the S&P both bottomed together. Of late, something different is taking place!

What’s different this time? Junk bonds are now above the September highs at (1), while the S&P 500 remains below the September highs at (2). This reflects that a short-term bullish divergence is taking place between Junk Bonds and the S&P 500.

Is Junk sending a rare positive message to stocks? Looks to be the case currently!