Jun 29, 2013

Can the Junk Bond Yield indicate the coming turmoil in S&P 500?


The Effective yield on High yield bonds (Junk bonds) can give a hint on where the equities are headed. When the yield breaks above resistance of bullish falling wedges, the S&P 500 generally declines. You can correlate (anti) the surge in High yield and the equity performance.
Now the yield on junk bonds is breaking above resistance of a bullish falling wedge for the third time since 2007.



What is happening in the Junk Yield lately?





The same chart over the past 15 years. Now do you want to heed to the  message from High Yield bonds?