FYI: Jon Krinsky, Managing Director and Chief Market Technician at Baycrest Partners, looks at a few of the technical red flags that exist for the US stock market as we head into the summer. He points out the awful action in materials stocks, energy stocks and the transportation index – all of which have been lagging the market on a relative basis over periods ranging from 3 years to 18 years.
One other warning sign for the secular bull market – stocks peaked in early 2018 after a raging rally in 2017, and then fell apart. In September 2018, the S&P 500 was briefly able to squeak above the old highs, but that rally gave way to a 21% bear market and, besides, credit spreads never confirmed those highs. Junk bond spreads vs Treasurys didn’t make a new tight this fall when stocks made a new high, and have since begun to blow back out again. These spreads failed to get back to their record tights during the rally this Spring as well.
Regards,
Ted
https://thereformedbroker.com/2019/05/27/credit-spreads-vs-the-bull-market/
