The solid yellow squiggle is the S&P500. At first glance (and second for that matter) looks like they move in lock-step. JNK even marked out a key reversal from the March lows.
It's interesting that the spread to the S&P remains a fair margin wider than around the time Lehman's went to the elephants graveyard. This could reflect the fact that liquidity in the first instance has been flowing to credit - you can see the leap in volume that kicked in around the time the Fed opened the sluices.
Recent price action remains inconclusive. Price could pretty easily push on to the $40 to $42 level from where it broke down last September. On the other hand, zooming in the daily and you could just as easily expect a push back to $33 - $34 (closed at $36.30).
However, one other thing to note - and this might be important - JNK has not broken to new highs with the S&P (JNK peaked on 31Jul at ~$37.25). This is a pretty significant non-confirmation. If the market is being driven by liquidity, and this liquidity is s'posed to be invested in the carry trade (with a trickle down effect to equities), then what the hell is happening here? Hmmm...
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