Watch Corporate Bonds - Bond Selloff to Trickle into Stocks?
LQD has just had 4 consecutive closes below the 21 ema, this may well be a sign of weakness in an already overextended market.
As you can see, LQD and the SPX have had a very tight correlation, particularly since the liquidity hose was turned on after the market crash in March. This is why a selloff in the bond markets, may very well forewarn of a potential correction (perhaps severe, perhaps just mean reversion).
This is made more concerning, with the selloff in HYG occurring in tandem with the selloff in LQD, the question i have is, what do the bond investors know that equity investors do not?
-TradingEdge
As you can see, LQD and the SPX have had a very tight correlation, particularly since the liquidity hose was turned on after the market crash in March. This is why a selloff in the bond markets, may very well forewarn of a potential correction (perhaps severe, perhaps just mean reversion).
This is made more concerning, with the selloff in HYG occurring in tandem with the selloff in LQD, the question i have is, what do the bond investors know that equity investors do not?
-TradingEdge
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