• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock HY Bond A-D Line Showing Liquidity Problem
Stock

HY Bond A-D Line Showing Liquidity Problem

by February 17, 2023
by February 17, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Early in 2023, the S&P 500 broke out above the year-long downtrend line that everyone has been watching, and it has been struggling a little bit in February 2023 trying to extend that breakout. While it looks like just a pause for the S&P 500, the underlying weakness is evident when we look elsewhere, especially among the investments which are the most vulnerable to liquidity problems, the high-yield corporate bonds.

HY bonds trade more like the stock market than like Treasury bonds, because HY bonds are subject to the same vicissitudes of financial market liquidity waxing and waning. FINRA publishes the data on advances and declines every day here, and it can give useful insights for the stock market. One can even make the case that the HY Bond A-D Line serves as a better canary in the coal mine than the composite NYSE A-D Line.

This A-D Line started showing us a big bearish divergence in late 2021, even ahead of the pretty big divergence in the NYSE’s A-D Line. That bearish divergence correctly foretold the awful market weakness we endured in 2022.

There is no bearish divergence showing now, but we are seeing a suddenly weak HY Bond A-D Line. It peaked on Feb. 2, 2023, the same day as the S&P 500, but, since then, it has been falling almost daily and has now dropped below its 5% Trend. Having it below that exponential moving average (EMA) is what happens during price downtrends.

The message is that financial market liquidity has suddenly left the building, and that this is going to come around and bite even the big-cap stocks. They can muscle aside the little guys for a while, like the big pigs at the feeding trough, but eventually it affects them too. The vulnerable ones are more useful in this respect, showing us that the liquidity is drying up ahead of time.

You Might Also Like
  • Yields, Oil, US Dollar Rise, Equities Tepid: Stock Market Starts the Month With Mixed Signals
  • Risk-Neutral Market Gauges Ahead of Sunday Deadline
  • The Semiconductors Have Topped; Look Elsewhere For Opportunities
  • The Halftime Show: Soft Landing, No Landing, Fly By?
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Year of the Big Swing and Month of the Small Flag
next post
How to Improve Your Trading by Limiting Your Options

You may also like

Generate Consistent Income with These Options Strategies

May 21, 2025

Bank Fear Selloff Gives Way To Earnings Driven Rally –...

April 29, 2023

Mastering MACD: The Fly-By Pattern

February 1, 2024

Silver Cross Index is Topping on Broad Market Indexes

January 5, 2024

When to BUY, When to SELL, and When to SIT...

September 19, 2023

The Top Five Charts of 2023

December 23, 2023

Equities Remain in Strong “Go” Trend as Tech Returns to...

December 9, 2024

Breakout Or Failed Breakout: It’s Important To See The Difference

January 9, 2024

KRE’s Impending Plunge: What This Emerging Crisis Means

March 27, 2024

Two Holding Up and Two Breaking Down

October 3, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Joe’s Best-Looking Sectors

    February 2, 2023

    Will the QQQ Sell Off in...

    December 13, 2024

    This is GOOD STUFF: A Bullish...

    August 14, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here