High-yield, aka 'junk' bonds, which are highly correlated with the stock market & not with other bond classes, have made an impulsive breakdown below this large bearish rising wedge pattern in HYG (High Yield Corporate Bond ETF) which also makes the recent breakout a failed breakout, i.e.- bull trap. As the performance of junk bonds is much more dependent on the economy than interest rates, as with other bond classes, high-yield (junk) bonds have an extremely tight correlation to the stock market due to the fact that default rates rise when the economy weakens.
The outlook for the US stock market via SPY, QQQ & IWM as well as gold, oil & bonds via USO, $WTIC, GLD, GDX, TLT, JNK & HYG.
This video covers the long-term outlook for the bond market as well as some of the near-term developments as well as the potential implications that they could have on the stock market. This video goes in-depth with an overview & discussion on the various type of fixed-income instruments, such as treasury bonds, municipal bonds as well as both investment grade & high-yield corporate bonds. While most of the video analysis posted on Right Side Of The Chart focuses on swing trading opportunities with time horizons typically measured in months, the take-away from this video is that the outlook & most likely [...]
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HYG & JNK are the two most popular high-yield (aka- junk bonds) bond ETFs & both are current at or very near both key downtrend line & horizontal price resistance levels. While the MACD is still pointing higher, the possibility that junk bonds continue to rise & take out these resistances levels certainly exists as the trend remains bullish for now but based on how overbought these ETFs at this point along with my overall read on the charts, I favor a rejection off these resistance levels & a meaningful reversal from at or near currently levels. With [...]
The day before Ben Bernanke was scheduled to speak regarding Fed policy, I stated: " I would not be surprised to hear Bernanke give some indication that he is open to the possibility to beginning to start tapping on the breaks when he speaks tomorrow. If so, which we all know will have to happen sooner or later, there will eventually be a rush for a very crowded exit on bonds and dividend stocks." Of course, if you make enough prognostications, some of them are bound to stick every now & then. However, my point in revisiting those comments is not [...]
Here's an overview of the fixed income market, as shown in descending order of quality (US Treasuries- Junk Bonds). As always, once the first chart is clicked to expand, just click anywhere on the right side of the chart to advance to the next image. To zoom in or out, use your mouse scroll-wheel or drag the lower right-hand corner of the chart.