Market Journal: The Signs are There

Discussion

I’ve written a lot about the bearish divergence between SPX and IG CDX. This continues to play out. Even in the strong bull markets of post-COVID 2020 and back in 2017, bearish divergences with IG CDX ultimately resulted in SPX moving below the level at which the divergence developed. In this case that’s SPX 4700. The Yellen/Brainard put is likely too strong for more than -10% downside, but the signs are there for -10% downside into March 31.