High-Yield Pessimism Hits Other Assets
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Jason Goepfert
Published: 2018-02-10 at 18:24:55 CDT
This is an abridged version of our Daily Report.
Heavy selling in high-yield
Most of the measures we track for the high-yield bond market are getting stretched. This week, there was some of the most indiscriminate selling in over a decade.
Future returns have been very positive after similar pessimism, though bear markets are a different story.
Risk vs reward
Looking at every date in the most compelling studies this week, the risk vs reward is clearly skewed positive. The vast majority of dates showed a positive return over the medium- to long-term. The probability of a bear market was small, especially in the near-term.
Miscellaneous
Stocks do, indeed, bottom on Friday just as often as about any other day.
The volatility this week managed to trigger a CNBC special report and a Tweet from the president.
A big spread
The spread between Smart Money and Dumb Money confidence is now +40%, a rarely-seen level when the S&P is still above its 200-day average. According to the Backtest Engine, there have been 58 days when this occurred since 1999.
Consecutive selling
The S&P 500 sold off more than 3% on back-to-back weeks yet remains above its 52-week moving average.
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Related Posts:
- Investors Have Soured on Stocks AND Bonds
- Optimism is Low in Both Stock and Bond Markets
- A Logical Bond Market Experiment (That Just Might Work)
- Weekly Wrap for Oct 1 - Momentum Streaks End, Couple of Commodities Surge, Chinese Tech Washout
- What to Watch for in the Bond Market
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The post titled High-Yield Pessimism Hits Other Assets was originally published as on SentimenTrader.com on 2018-02-10.
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