JNK trade ideas
It's an update, I feel the downside way widerFollowing my previous analysis, I decided to increase the canal range
New objective around 55
JNK Junk bonds have rebounded off previous supportThis long term chart of JNK shows that the price is currently in a down trend within a larger down trend. The slope of the down trend is also steeper than the long term support up trend. My own view is that this thing is a ticking time bomb. Continuing to follow.
JNK/TLT ratio just peakedJNK (junk bonds - aka corporate riskier debt) / TLT (20 year bonds):
Rising level means risk-on appetite for the market
Dropping level means risk-off.
We just peaked, however we could still see sizeable last market parabolic rally.
... as an addendum to the previous analysis... similar to my previous analysis. We can see that risk-appetite, as indicated by junk-bonds, is at or close to an important support level. A short-term level might thus be expectable in SPX (which is overlayed). Afterwards, good night US led hegemony of western capitalism :o
Thanks!
PS: If you really read this analysis, check the previous one to compare both with one another.
PSS: This charting idea is stolen from GameofTrades ^^
Junk still keeps tankingThis collapse in Junk should have been much more bearish for stocks than what we have seen so far. I am wondering if the reality is still yet to be realised.
BTC and JNK/TLT ratioI plot BLX (which is BTC) along with JNK/TLT ratio.
JNK/TLT ratio is (Junk Bonds ETF) / (20 year bond ETF ) . This ratio can serve as an indicator, to show if the market is loving risk or loving safety on a macro level. Risk on to risk off ratio. You can see that the JNK/TLT ratio correspond with market bull & bear cycles. Notice the JNK/TLT tops form a trend line, and have some correlation with BTC tops - though not to the exact day or week.
I used the green box to mark a kind of fuzzy area, where the JNK/TLT did not top at the same time as BTC.
Notice the end. Will it touch the trend line as BTC tops out? Or Is it possible it plays out like the green box range, where BTC tops, and the JNK/TLT dances along underneath the trend line a bit further, because the stock market hasn't finished its run yet? Or did BTC top at $69k already? Make your own conclusions. I'm in alt coins. :-))))))
Green lines indicate JNK/TLT tops and red lines JNK/TLT bottoms. I then drew them up to BTC looking for correlation.
I learned this chart from "Game of Trades"
$spy If $jnk isn't a buy right here how is spy a buy?Riddle me this Batman, if junk bonds aren't a buy here then how is spy. Are they both a buy? We shall see
Leading Indicators Reversal in ProgressInteresting... in the last couple of weeks, as the Leading Indicators signaled a retracement, it appears that it may be time for a technical bounce...
JNK broke down as expected, and exceeded target. Last week's candle had a long tail recovery, and this current week is forming a rebound.
MACD still in bear territory.
IWM, DJT and VALUG all seemed to have retraced hard, and bounced off a support. MACD crossed and still in bear territory... may not be over. sus.
TIPS failed a support and does not seem to be recovering, not bouncing for the matter. MACD appears to be recovering though. This one is rather odd, so I would just note and leave it for now.
TLT is not bullish as one would expect it to be. In fact, it looks bearish, which is favorable (bullish) for the equity markets.
VIX failed a solid break out and looks to be finding 16 again, signalling the interim volatilty is over and more bullish markets to prevail.
/HG Copper futures are held in a tight range and appear to be recovering this week - if it can hold steady and break out. MACD is not yet bullish.
Overall, the leading indicators are signalling an interim bottom. perhaps a larger than expected rebound should follow in the coming weeks...
Junk On Critical LevelJunk bonds are one of my favorite indicators for stocks. The week ahead will be critical for JNK. A solid breakdown in junk could be the catalyst to see stocks much lower. Lets see what happens.
Risk-on key market top metric never hit resistance trendlineIdeally we would see a tag of the (log) trendline shown here. Not sure yet if we saw the peak of risk-on or this is forming a type of descending wedge and we can expect some sort of breakout next year? With Fed's jawboning tapering (the T word), markets cooled off early IMO, I expect that type of talk to be backpedalled as soon as any collateral/asset/market dumps too far (exception for now may be crypto as it's not systemically linked yet to global financial system)
SHORT JNK ETFSELL or SHORT JNK ETF
Rationales: Most companies will begin to facing serious troubles to payback debt service with lower FCFO and higher interest rates.
$JNK: are Junk Bonds worth the risk? inflation plus credit risk?Inflation dat is signaling upward trend so far which should in theory be hurting demand for bonds. CPI at 6.2% while junk bonds yield around 4.4%, doesnt sound too good at the moment. How long until something changes for better or worse?
PVT (pattern volume trend) implies less enthusiasm than before at these prices. Both JNK and HYG have lower highs no in the price action. I think a repricing could occur soon.
Crash?!? Risk-on appetite may be coming to an end very soonMarket risk on appetite can be shown via JNK/TLT raio (or plotted in reverse as well)
Junk catches a bidJunk has caught a bid off the daily support. The weekly MACD divergence shows it could be temporary if a taper tantrum was to take hold.
JNK/TLT - Markets will go RISK-ON - EVERYTHING BULLISHWhen Junk bonds breakout of the 15 year downward trend, it will be epic!
Do you see the 15 year bullish divergence on the RSI! Holly cow!
That means traders will feel more comfortable taking on more risks in the markets. Equities, cryptocurrencies etc...
FOMO will get to everyone.
I think the top will be late Q1 2022.
Rotation Back into Junk Bonds & Large Caps Q4The JNK/TLT ratio chart visualizes investors' position in greed and safe bonds. An increase means more greed in the market, corresponding with an increase in equities. Based on where we are, I am expecting one last run in the stock market, reaching the top of our resistance trend-line. I have added a fractal to support this thesis.
$spy $tlt $jnk $hyg What a joke LOLThere is not way this should be happening in the junk world. it's a massive short imho
Junk double toppingJunk bonds look to be double topping. Could lead to some weakness in stocks coming into October. Lets see
JNK/TLT and BTC plotI was watching a video by "Game of Trades" dated August 31, 2021. He went over a JNK/TLT chart. I HIGHLY recommend it! It was the first time I had ever seen this chart. The shape at the end caught my eye. I thought, hmm. That looks a bit like the BTC (BLX) correction pattern.
So I first drew a JNK/TLT chart then put the black tendency line at the JNK/TLT tops. Then I added BTC to the chart. Then I added the curved historical tendency lines to the BTC chart. Plus I added a blue 4 year cycle theory linear line to the BTC chart. I'm not a 4 year market cycle theory person, but I included it for those who are.
Black line (on BTC) - historical curved tendency line
Blue line (on BTC) - 4 year market cycle theory line
I added vertical solid lines on the JNK/TLT chart at ratio highs and lows and drew them up into the BTC chart. Vertical dotted lines indicate other significant pivot points in the JNK/TLT ratio chart.
JNK = SPDR Bloomberg Barclays High Yield BOND ETF
TLT = ISHARES 20+ Treasury Bond ETH
Vertical solid red lines - Ratio at a low
Vertical solid green lines - Ratio at a high
The idea is when the market is taking on risk, the JNK/TLT ratio goes up. When the market is decreasing risk seeking safety, the ratio goes down. And the chart is a plot of this ratio.
As I mentioned above, on the BTC (BLX) chart I put the black historical curved tendency lines. Plus I put the blue linear (4 year market cycle theory) line for those who believe in this. Why? I think the JNK/TLT line offers another way to help determine that the top is in for BTC. So, no matter what theory you hold to, you can test it as the market matures. Nobody wants to get caught wrong footed stubbornly holding to a target price (including myself) based on theories and tendency beliefs, whichever they may be.
**CONCLUSIONS**
**1)** BTC up/down tendency seems to trend with the JNK/TLT ratio. This makes sense. If a market is taking on risk, well that is good for crypto.
**2)** The JNK/TLT ratio tops, bottoms, and pivots sometimes correlate with the BTC chart, but only sometimes. There were some bullseyes at times.
**3)** The tendency line of the JNK/TLT ratio tops may offer another crypto top indicator. So keep an eye simultaneously to whatever belief you have for your BTC target price. If the JNK/TLT ratio touches the tendency line - watch out.
$JNK Keep an eye on this important support levelKeep an eye on High yielding Junk bonds. A break below the all important horizontal support level @ 108.60 could be a major sign of risk off. Not only is this an important horizontal support zone technically, but it is also where we find the rising 200dma. A break below this level will be quite a negative for risk on assets
Credit market - hint of risk off?Junk bond spreads have been at historic lows, representing no stress evident in the credit markets. But lately, the $JNK : $TLT relationship is turning. Could this be a hint from the credit markets that we are moving towards a risk off (or reduced risk) environment? Watch the chart and accompanying RSI against key levels as a clue.
