In a previous post titled 'This Market Is Junk...No Really" it was noted how highly correlated High Yield and the S&P were . Since that post JNK managed to make it to the first of the 3 lines before turning down, along with the market.
The purpose of this post is to illustrate how disconnected these two have become over the past few days. I'm probably the last person you'd want to ask about the credit markets but I will go out on a limb here and say that if high-yield doesn't re-establish correlation on the upside then this rally will peter out sooner rather than later. Also, as others have pointed out, the Euro has decoupled from our indexes but so far has managed to hold the key level of 1.212 as a result of blatant Central Bank intervention in the currency. Despite two interventions occurring at this key level we've seen zEuro stay under pressure and has tested this level three times as of today (triple bottoms are as rare as a peaceful day in Afghanistan). Soros might be one-upping himself and instead of taking down one Country he's going for the entire continent this time.
The market chop should continue as [forced] de-leveraging takes place as well as a lot of participants have found themselves trapped and will use higher prices to get out.
