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JNK

Weekly Leading Indicators: BEARISHManaged to streamline down to these couple of charts for a set of leading indicators. Simple trend analysis and techincals are being used here for Weekly charts and so weekly analysis is appropriate to set the stage for a top down view. First up (on the top right corner) is the Combined US equities chart that shows a strong marubozu the previous week (from elections outcome). However, the following week was not a confirmation, but instead casts doubt on the sustainability of the spike to rally on. Point being, the massive breakout is met with a Dark Cloud Cover that breaks back into the Decision Box (purple box) which was previously marked out for the consolidation range boundaries. Typically when a breakout is followed by a breakin, it tends to follow through to the other end... a break down from the box support. Yellow circle is where it should go through or bounce at. What gives on this is that the following Leading indicators are eluding to... SG10Y Govt Bond Yields The uncanny correlation of this to the US Equities Indexes is remarkable and have been a hallmark of my recent posts and analyses. Here we have a breakout of the trendline resistance. Means equity markets are going Bear. RED Flag High Yield Bonds ETF (JNK) JNK looks to break the uptrend trailstop line, with a lower high that now has a Dark Cloud Cover as well. AMBER Flag TIPS and TLT Both have broken uptrend trailstops and are downtrending with a recent low. These are well known market leading indicators. RED Flags Semiconductor ETF (SOXL) Noted, and personal favourite, SOXL is clearly bearish from simple candlestick patterns. RED Flag So, overall, we have Leads telling us it is BEARISH again. Heads up!
CME_MINI:ES1!Short
by Auguraltrader
Market Leading Indicators - suggests DOWNThis is my most summarized panel of leading indicators which I use to assist in the determination of market projections, over and above technical indicators. The SG10Y is about to break out The JNK bonds are breaking down Both TIPS and TLT have already broken down the uptrend support (bearish trend now) The SOXL (semicon ETF) and the combined US Equities are just about to keel over. Leads have turned down or are at the turning point. Heads up!
CME_MINI:ES1!Short
by Auguraltrader
Galloping SPYThis chart is frightening. It suggests that SPY can become a modern-day example of Galloping Gertie, the famous Tacoma Narrows Bridge which collapsed from nothing more than wind. I have said it before, 2022 was the year when an Equity Crash didn't actually happen, while we were all talking about it. It is but a scratch. But with a bleeding chopped-off arm, how long can you last in war? Instead of an equities being killed, a Bond Crash came, and nobody has talked about its ramifications. This is the European Bond, one of the most stable, until 2021. Imagine what has happened in corporate bonds. We can never know for sure the sheer extent of the destruction... In stock market, higher is not necessarily better. Higher is riskier. SPY is considered to be diamonds. JUNK Bonds are, well, junk. Imagine the balance shift when this trend breaks. And it very much it will. It is statistics after all. The more times you get heads repeatedly, the rarer the event. Think, for how long has SPY been diamond, and JNK junk? With yield rates peaking problems may arise. The bond market will suddenly revive again. As a byproduct, dollar will get a massive hit. Some charts suggests that its days are numbered. This chart calculates dollar strength based on the value of its total supply. If a currency manages to get printed a lot and sustain high strength, then it must be good. Especially if it pays out good yield rates. Rate cuts in US isn't good news for Dixie... Tread lightly, for you are dead. You just don't know it yet. -Father Grigori Final thought: Rate cuts can be a double-edged sword. If FED announces rate cuts, this gives two messages. -- Financial strength has weakened and rate cuts must come to keep the economy afloat. Bad news can trigger Black Swans. The 2008 crisis followed after rate cuts, not rate hikes. -- Rate cuts will trigger a massive flow of money into bonds, emptying the equity market. Careful what you wish for, and what you prepare for.
AMEX:SPY
by akikostas
1
High Yield Corporate Bonds as indicator for Risk AppetiteThis is not something I would use as a trading signal by itself, but it is a good indicator on the weekly chart of how bigger players are viewing risk appetite. High yield corporate bonds, as seen reflected in ETFs like AMEX:HYG and AMEX:JNK , are an interest data point. High yield implies that these are riskier bonds with a higher chance of default on the debts. Just like as individuals, we have credit scores and when we apply for loans, the interest rate can vary depending on how the bank rates us risk-wise on perceived ability to pay back the debt, those who have a lower score might get a higher interest loan because they are considered higher risk of default. Same basic principle applies to corporate debt. When liquidity is flowing and the economy overall looks good, large investors/investment banks will feel better about buying riskier high-yield bonds and other debts because we're in an economy paradigm where there's a better chance that not enough of those will default to cause significant harm to the debt holders. But, when the economy is getting pinched for whatever reason and liquidity starts to dry up, high risk, high yield debts are much less desired due to perceived increased risk of default. Sometimes the high yield debt moves pretty close in tandem with the market, see for example the dumping that happened during the 2020 COVID panic. Before and after that, you can often see a bearish divergence in AMEX:HYG and AMEX:JNK many weeks before the S&P finally tops out and begins its decline. The above chart, you can see the decline become more obvious as we wind down 2017 and head into 2018, then also see it again pretty obviously in the second half of 2021 before the sell off for most of 2022 started. Both AMEX:HYG and AMEX:JNK came online around 2007-8 timeframe, just before the GFC. You can see a pretty steady decline right from the beginning there, and a rapid rebound as things find bottom. What is interesting is how far both AMEX:HYG and AMEX:JNK came down throughout 2022, and while equities have since had a nice recovery bounce for most of 2023, the high yield bonds have not had such a recovery. It's actually instead slowly condensing price action with slightly higher lows, but also lower highs. We seem to be nearing the end of that wedge and hopefully soon we get an answer on what the risk appetite really is of risky debt, because it will be a solid signal of where equities may be headed next. Personally, I'm already seeing some indications that as we approach the end of the year, we may see a larger dip in equities. For how long and how large, that remains to be seen. For right now, we're having a recovery rally from selling off most of August and I'm not seeing any indication it's a good time to go against that trend, but that may change in the coming weeks.
AMEX:SPY
by dieseldub
Significant Divergence in equity markets and leading indicatorsObservable for weeks now, and recently, the divergence is much more pronounced. What I am referring to are that the equity markets appear to be more and more bullish, breaking out of trendlines; while the leading indicators (TIP, TLT, JNK and inversely VXX) show an imminent deterioration, about to breakdown of trendlines. The combined US equity markets and particularly the NASDAQ itself is very bullish, spiking up and hard in the last two weeks, extending further from mean. So, going forward the next couple of weeks, either one of two needs to happen. EITHER, the equity indexes continue the upward surge and the leading indicators reverse course to align and exceed (and return to be leading indicators); OR the equity indexes breakdown really hard to converge with the leading indicators. Watch for the latter, as the leading indicators break down of the trend line and show commitment. Then the equity markets may give a swift reversion into convergence and confluence. There are many ways to look at this and many more parameters to add in, but keeping it as simple as I would, perhaps waiting and watching for the next couple of weeks might be better than taking a committed position. Stay safe, keep a watchful look, be ready...
CME_MINI:ES1!
by Auguraltrader
Good news for stocks, bonds are bottoming $JNKAMEX:JNK is an ETF that tracks rated high-yield bonds or "junk bonds". These are the bonds rated Ba1 & BB+ by Moody's Investors Service, Inc., & Fitch Inc. respectively. The bullish divergence with the ROC is pointing out that a bottom is near. Bonds bottoming is a good sign for the market and breakout to the upside should confirm a healthy uptrend for stocks. This ETF has a high correlation with the AMEX:SPY ; 0.7021 for the last 3 years, so, let's wait and see.
AMEX:JNKLong
by dpuleo19
Leading Indicators are very BearishThe JNK ETF is heading further down with a big bearish Marubozu that is the YTD low -> Bearish for equities. The IWM ETF is also heading further down for a lower low with a bearish Marubozu engulfing -> Bearish for equities The DJT ETF ended on a recent low too -> Bearish for equities The VALUG has a bearish candle for more downside -> Bearish for equities The TIPS ETF bearish marubozu ending on a YTD low-> Bearish for equities The TLT ETF is diving -> no flight to safety, just selling. The VIX is coiling -> bearish outlook for equities, more volatility incoming when it spikes! The HG1! copper futures ended on a strong low for the week, and will be attacking support. Expect failure. Overall, very Bearish bias on equities for the next couple of weeks, and at least until the VIX spikes very hard before retracing (it is only coiling now...)
AMEX:JNKShort
by Auguraltrader
Have corporate bonds bottomed?The Corporate bond market got extremely oversold and it bounced without the Fed having to pivot. Essentially the market got to 2013-2018 levels, and bounced nicely at the old support. But we still don't know whether the bottom is in or now, as there are more questions that need to be answered, like: Does the market expect the Fed to reverse course soon? Does the market think the bottom is in for bond yields? Does it think inflation has peaked? In my opinion the market did the tightening itself without the Fed. The Fed did a mistake for not raising rates and ending QE faster, however they were right on their approach to go slowly, as one way or another inflation would slow down. By inflation slowing down down I don't mean that prices will go down, just that prices will go up a lot less than they did over the last 1-2 years. At the same time I do believe that as inflation comes down, it is possible that we get to see the Fed say that they will pause their hikes after raising them to around 2% and will let their balance sheet roll off on its own. Essentially higher interest rates, lower asset prices, tight fiscal and monetary policy, and already high energy prices are crushing demand. The Fed was/is behind the curve, but as the curve seems to be now moving to the direction of the Fed. To a large extend their objective has been achieved, as this correction was similar to the 2018 correction, only that this time around the correction was welcomed when back then it wasn't. Now I don't really think the bottom is in for corporate bonds, however I also don't think they are going to roll over very quickly. If the food & energy crisis gets worse, I have no doubt that these will get crushed. It just seems that in the short-medium term things will cool down a bit and part of them Fed's goals have been achieved. The US economy remains fairly strong and its corporations are in a fairly good shape, despite everything that has been going in the world over the last few years. Having said all that I don't want to be a buyer of HYG at 80. At those levels I think it is better to short and aim for 77-78, and then if the price action looks decent, go long at those levels. The bounce is too sharp for it to have legs to go higher immediately. I'd expect more chop in the 75-81 area before the market decides whether it is going to go higher or lower.
AMEX:HYG
by BitcoinMacro
4
Leading Indicators Reversal Still BearishThe JNK ETF looks like it is heading further down still -> Bearish for equities. The IWM ETF is likely to follow through after closing at a low -> Bearish for equities The DJT ETF looks a tad bearish too -> Bearish for equities The VALUG looking to fail support, with a bearish candle for more downside -> Bearish for equities The TIPS ETF continue down draft-> Bearish for equities The TLT ETF is still diving -> still not seeing any flight to safety. The VIX just broke out above the trendline -> very Bearish for equities The HG1! copper futures downtrending Overall, rather Bearish bias on equities
TVC:VIX
by Auguraltrader
Bond yields in the era of high inflationAs you can see on the main chart, 10y bond yields have broken above their downwards channel and are now back at their 2013-2018 highs. Based on technical analysis we don't have a confirmation that the trend has fully reversed until we get a close above 3.2%, but we are pretty close to breaking above that level too. Now we aren't only seeing the 10y yields rise, as all kinds of maturities are rising at the same time and are rising pretty fast. The trend is showing no signs of exhaustion and this could get pretty ugly for the world economy, as the Fed has barely raised rates so far and they are threatening to raise rates by 0.5% at every meeting in 2022. Many analysts claim that the bond market is broken and that yields will rise even further, but are they correct? Well the truth is that the way bond market topped (yields bottomed) in March 2020 is definitely an indication that a bull market is over. Currently the market has broken below most major support lines and seems to be accelerating rather than decelerating, while the correction from the peak is indicating that the bull market is over, as during bull markets corrections tend to stay within a certain range, and this correction is way larger than any previous corrections. At the same time the 2y year yields are above 2.5%, a level that they 'shouldn't' have broken if the bond bull was intact. The reason behind this is that usually 2y bond yields would never go above the peak of the Fed Funds Rate and during the last hiking cycle the FFR had peak at 2.5%. Currently the 2y yields look like the formed the perfect round bottom (bullish technical pattern) and have broken above their downwards channel and could also be headed higher in the medium to long term (an indication that the bond bull could be over). However not everything is really bearish for bonds at the moment and there is some hope for the bull market, even if that means we only get a strong bounce before going lower. As the 10y and 30y yields haven't broken above their resistance levels yet, it might be a good time to start buying bonds. Why? Well as yields are at resistance, bonds are close to support. The actual bonds are so oversold, that the current move might be getting totally irrational. Yes inflation is going up, yes inflation could go higher and inflation expectations keep rising, but the rate of inflation could come down. Not only that, but the Fed is so trapped that everyone knows they can't really raise rates much more or sell bonds without breaking the market. Financial conditions have already tightened so much, that investors will eventually run to the safety of bonds which finally have a pretty attractive yield. Of course my reasoning doesn't just rely on some random fundamental analysis, but also some technical factors. The first one has to do with how this break of the trendline could be a trap and this move is headed straight into a very important area in which there is strong support. On TLT there is a major gap at an area that was support, it was broken and then the market quickly closed back above it. That's the perfect place to go long. The second one has to do with the fact that the yield curve had inverted and has now un-inverted itself. Usually inversions happen close to the bottom of the bond market (peak in yields) and therefore this could be another useful signal that a bottom isn't far away. Again this doesn't mean that someone has to go long right now or go long big, just that maybe its time to cut down shorts and put on some small longs. Personally I like to move between being a bond bull or bear based on the data and not have dogmatic views about what will happen in the future. Finally I'd like to talk a bit about junk bonds, which are at the same level they were when the Fed had raised rates at 2.5% and kept saying that they would keep hiking. With so much debt in the world, the Fed threatening to keep hiking rates and the global economy being in shambles due to Covid-19, aging demographics, supply chain issues, lockdowns in China, the Russia-Ukraine war and commodity shortages, it is hard for someone to really see how owning junk bonds is a good long term bet here. Shorting junk bonds is probably the best bet someone could take at this stage, if he/she believes that there is going to be a major collapse either in the stock market or the bond market. What I find very interesting is how resilient American companies have proven to be, and how after so many major crashes since 2008, now junk bonds are rallying against treasuries. By looking at the HYG/TLT ratio, we can see how they have outperformed since the March 2020 crash, potentially due to how much the US government has support those companies and how much more the private sector has benefited from low rates and money printing compared to the public sector. By adding to the mix how strong stocks have been over the last 2 years despite all the negative events, we can make sense of why junk bonds are outperforming us treasuries. Maybe this is also a major sign that buying stocks is a much better idea in the long term than buying bonds, and that the stock bull market is still intact, but that's a topic which I will discuss in another idea. In conclusion, the bond bull could be over. There are several signs indicating extreme weakness in bonds as inflation expectations keep rising and the Fed is unwilling to support the bond market. Yet we are at levels that not buying bonds seems like the wrong decision, even if buying them would only for a short time period only.
TVC:US10Y
by BitcoinMacro
NQ CorrolariesThe Nasdaq 100 is closely correlating to a number of Instruments - LQD UUP (DX< DXY) and TLT. JNK to a lesser degree as well. TLT has served to be the better of these corollaries. ____________________________________________________________________________________ I am waiting for a capitulation even in TLT with 10-year yields reaching 3%+ to 3.265 as the potential High. This would serve to drive the 20 Year ETF to a flush down low while providing a similar washout for NQ. It would need to happen this week, perhaps earlier than later. TECH is the weaker component relative to the ES and YM, the RTY is trading on its own and leading the drive lower - although it may be consolidating in this tight range, a breakdown would imply 16x' below 1911. This would be very bearish and reduce the probability the Indices have put in a Sustained Low.
CME_MINI:NQ1!
by HK_L61
Leading indicators are BearishVery quickly before the market opens... The JNK ETF is heading further down for lower low -> Bearish for equities. The IWM ETF is likely to follow down continuing the candle -> Bearish for equities The DJT ETF broke support -> Bearish for equities The VALUG failed the resistance, with a bearish candle for more downside -> Bearish for equities The TIPS ETF gave up and gave way -> Bearish for equities The TLT ETF is looking for a non-existent bottom -> no flight to safety. just gave way, period. The VIX just broke out and checked in at the support... spiking up soon? The HG1! copper futures stalled at resistance. Overall, Bearish bias on equities
COMEX:HG1!Short
by Auguraltrader