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A Correction Is In Order Now

|Includes: FAS, iShares iBoxx $ High Yield Corporate Bond ETF (HYG)

In October the market took a noticeable dip. Although some called it a correction, I would describe it more like a correction attempt because the markets barely made it into correction territory before the last rapid v shaped move to new highs.

Above the DJI average over the last 2+ years

High yield bonds have been pacing ahead of the market - that is until June:

HYG over same time period

So while the DJI was flirting with new highs Friday, HYG is moving notably lower. I believe at some point the DJI will catch up with the junk bonds, at least to the point of a correction.

Of course, when everyone expects a correction it usually doesn't happen. That I think, was the case in October.

Disclosure: The author is short FAS.