MUB Municipal Bond Fund Daily Chart Negative Divergence

In light of the Jefferson County, Alabama, bankruptcy announcement, an update of hte muni charts is in order. Pundits are already dismissing the bankruptcy as a one-off event but the slow motion train wreck continues with Harrisburg, Pennsylvania, in recent memory as well.

Note the spike upwards to the prior high in early November (red lines). The indicators remain in negative divergence only bolstering the bearish case. Price came back down the last few days to form a confluence with the 20 and 50 MA's. This price action over the next few days will determine direction, which is expected to be down. Bears want to see price under the 20 under the 50. Bulls want to see price above the 20 above the 50.

The RSI 50% level will also provide clues on direction. Projection remains for lower and lower prices going forward, working back towards the 102-103 level that represents Meredith Whitney's initial price level when she made the negative call on muni's a year ago. Then further lows and lower prices should be realized in the months ahead and will be very much a 2012 story. This information is for educational and entertainment pruposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.