Chart of the Day - Friday, March 10th, 2023

Today’s Chart of the Day was shared on Twitter by Stacey Lee (@BBaxter2020). It's a chart of the S&P 500 over the past two years (top) and a ratio chart of Treasury Bonds vs. High Yield Bonds, which serves as a proxy for credit spreads (IEI/HYG). The S&P 500 dropped 4.55% this week, marking its worst week since September. We lost some key support levels this week including the 200-day moving average and the AVWAP from the peak. Stacey points out that the S&P also broke below the uptrend line that has been in place since the October lows. At the same time, credit spreads are beginning to widen out, with IEI/HYG breaking out of an 8-month downtrend line. This is not a bullish look for equities as widening credit spreads often signal stress in the markets.