When stocks are showing weakness, we can learn a lot by watching the credit markets.
And in today’s case, Junk Bonds and the ETF $JNK.
Better yet, today we share 2 charts to better illustrate was is happening in the broader markets.
The first chart is the Junk Bonds ETF (JNK) on a “weekly” timeframe. As you can see, $JNK is nearing its COVID lows and has fallen much lower than its June low. This has formed a bearish divergence with stocks, as several indices have yet to puncture the June low… or, if they did, it was very marginal.
The second chart looks at $JNK versus the S&P 500 ETF $SPY. This illustrates just how much further $JNK has fallen when compared to stocks.
In summary, stock bulls do not want to play a game of catch up with junk bonds! Stay tuned!!