Do you know where your chair is? Or when to exit? Or what your stop is? The stock market picture continues to worsen and you better have a plan if you are an investor. And if you are a trader then you already know your plan…right?
Yesterday the Wall Street Journal had an article about a high yield bond fund that was locking investors out of their ability to get their money, while they liquidated the fund. Now I’ll admit it was not a fund that I was familiar with, but that doesn’t matter.
Take a look at the chart below of HYG, the iShares IBOXX High Yield Bond Fund. It is not a pretty picture. It continues to weaken and lead the stock market down. If you’ve followed me for a while, you know I’ve been talking about this for a long time now.
The New York Stock Exchange (NYSE) Composite Index (NYA) is one of the best pictures of the market as it has over 2000 stocks and provides a broader more accurate picture of the market. See the chart below.
The NYA has so far broken below the October and February 2014 lows. The S&P 500 hasn’t done that yet and the DJIA broke the October 2014 low but not the February low.
So the DJIA gets a lot of press because of its historical stature and the S&P 500 is tied to the popular index futures contract, but the NYA is an index that you should watch closely.
I believe we are at a critical juncture in the market here. Stay tuned and get ready to grab your chair. The stock market music could stop at any moment.