Credit Momentum Flips Green — Stocks Love This Setup🟢
September 24, 2025
Today's number is... –0.18
The 26-week momentum in Moody’s Baa corporate bond yield has dropped to –0.18, flipping the signal back into the green zone.
Here’s the chart:
Let's break down what the chart shows:
The top panel shows the S&P 500 in black.
The bottom panel plots the 26-week momentum in Moody’s Baa corporate bond yield as a black line.
Shading reflects the 26-week momentum in Moody’s Baa corporate bond yield. Red means momentum is above zero. Green means it’s below zero.
The table shows how the S&P 500’s historically performed during each regime.
The Takeaway: This is the first meaningful push lower in this indicator for 2025.
The 26-week momentum in Moody’s Baa corporate bond yields measures the rate of change in corporate borrowing costs. A reading below zero means yields are decelerating rather than accelerating.
In other words, credit pressure is easing.
And this type of regime shift has mattered historically.
Since 1986, the S&P 500 has produced an annualized 15.1% return when this indicator is below zero compared with just 0.8% when it’s above. The green zone has also covered 56.6% of the past four decades, and those stretches have been the market’s most productive.
Negative momentum doesn’t guarantee gains, but it has tended to align with calmer credit conditions and stronger equity returns.
Today’s –0.18 reading keeps conditions on the favorable side.
If momentum stays negative, history points to a supportive backdrop for stocks.
Does this first meaningful push lower into the green zone in 2025 clear the runway and fuel the next stage of the rally to fresh highs?
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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