If you've been following me at all you know I look at a few ratios just like your favorite CFA. Only my ratios come from the market and not someone's subjectively inputted spreadsheet. Does anyone really know what earnings will be next year and what the right discount rate is?
Anyway, this is the ratio of the junk bond ETF to the high grade corporate bond ETF. Basically, when the ratio is going down, junk is underperforming quality and that suggests risk-off. And when the ratio is rising, invetors are getting more aggressive with junk as they chase yield - or throw caution into the wind.
With a hat tip to the Dave Landry big blue line, the trend is still down. This is one of the ratios I used in July to foreshadow the July breakdown in stocks.
And please do not call that an inverted head-and-shoulders. Things that do not actually trade need to be given a lot more rope than a tight pattern can offer.