Stocks are selling off, but major indices are at/near crucial support, testing the will of the bulls.

High-yield spreads are tightening. In Chart 1, the ICE BofAML US high yield BB effective yield is pitted against Moody's seasoned AAA corporate bond yield and the 10-year Treasury rate.

Spreads over both corporate investment-grade and 10-year Treasurys have been gradually inching higher in a sawtooth pattern for a while now. The former in particular has been in a sharper uptrend. As of last Thursday, the yield difference between investment-grade and high-yield was 1.18 percent, up from .37 percent last May. Investors are beginning to seek protection in more reliable companies.

Be that as it may, the green line – as well as the red line – is nowhere near the highs of February 2016. There was a mini panic back then, which was also when US stocks reached a major bottom.

Fast forward to now, stocks once again are selling off. January was very strong, but this has been followed by weakness in February and March-to-date.

It is too soon to say if stocks are pricing in a scenario in which the current trajectory in Chart 1 continues. But cracks are beginning to show in technicals.

On the Nasdaq 100, no sooner did a breakout occur 11 sessions ago than it was lost (Chart 3). Following that breakout, the index did rise to a new intraday high of 7186.09 on March 13, but it came in a bearish engulfing session. Last week, it fell out of a seven-week rising channel.