Riskier parts of the bond market are seeing heavy selling pressure while higher-rated bonds are being bid up to a record degree.

via sentimentrader:

More splits than a gymnast

Different parts of the bond market are seeing vastly different treatment from investors. Riskier, lower-credit parts of the market are seeing low demand and heavy selling pressure while higher-rated bonds are being bid up to a record degree.

There has been this wide of a disparity only 3 other times in 25 years.

All three of them experienced issues, but on different time frames and vastly different contexts. It’s hard to read much into such a small sample, but it seems to be at least a minor worry. For other assets, the havens of bonds and gold held up well, while the dollar fell.

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More Momo

The stock market’s momentum remains strong, which typically leads to more gains over the next 6-12 months. With the S&P 500 back near its all-time highs, its 14 weekly RSI is now at 68. Just another week’s rally, and the S&P will probably become overbought for the first time since last September.

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When the S&P became close to “overbought” (at least according to the popular RSI indicator) for the first time in more than a year, it typically continued to rally over the next year.

 

 

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