The market has a big junk problem and it’s very evident when taking a close look at the chart of $JNK, the high yield bond ETF. It’s been a brilliant technical indicator as of late and was one of the signals employed in fading the rally earlier in the week.
Note that $JNK has been on a steady uptrend for the better part of a year when suddenly it made a lower high in January while $SPX kept ignoring it and went on to make new highs. Not listening to $JNK was a mistake on the side of market participants. $JNK signaled troubles was brewing and once markets finally caught on it was all over.