As we've seen some of the highest-flying stocks in the market pullback in the last couple of days, we haven't seen much of an uptick in other market measures of risk. Since last Wednesday's close (which was the day Facebook (FB) reported), the VIX has only risen one point, from 12.29 to 13.29. That hardly signals a white-knuckle feeling on the part of investors. Similarly, the high yield market has seen virtually no reaction. Since last Wednesday, high yield spreads have actually declined slightly. Granted, most of these stocks getting hit so hard have no debt, so they don't have much of a direct impact on the debt markets, but if investors are becoming more risk-averse by lightening up on high-fliers, one would think that there would at least be some sort of indirect impact.
Not only has high yield been relatively unscathed, but the sector has made a new high on a total return basis over the last few days, and that's something we haven't been able to say since 1/26, which was also the last time the S&P 500 closed at a new high. High yield debt is just one of many internal indicators we track to gauge the underlying trend and health of the market.
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