Thursday, August 11, 2016

HYG High-Yield Bond ETF Weekly Chart Negative Divergence Developing

The HYG weekly chart is set up to drop. Everybody and his bro is buying high-yield. The rally off the February lows is parabolic. Well, nothing last's forever. Price is squeezing inside the rising wedge pattern. Stochastics and RSI are overbot. The red lines on the right side of the chart show the negative divergence in play that wants to see a smack down in this weekly time frame.

However, note the green line with the MACD line. After a pull back, HYG will likely come up one more time to set up neggie d with the MACD, that will mark the top and roll over to the downside. Advernturous traders can potentially short the HYG now for the initial pullback. If you were long and made a lot of money in the high-yield arena, do not wear out your welcome, it is time to scale out.The HYG daily chart is negatively diverged across all its indicators wanting to see a spank down in price now. 

JNK, LQD and AGD are set up similarly and the same technical analysis would apply. For MUB, the muni bond fund ETF, the weekly chart is toppy but MUB likely needs one more high at 114-ish in the coming days or week or two, and then will likely roll over to the downside.

The HYG chart above shows the neggie d spank down in May-June 2015, then the possie d recovery in February this year and now neggie d is setting up again, with the MACD line likely needing one or two more weeks to negatively diverge, which sets up multi-weeks of downside.

On the HYG monthly chart, the indicators are negatively diverged over the last few years, however, there is short term strength. This hints that the HYG may print a significant long-term market top in the months ahead, say, in the September-December time frame.

Thus, mixing all the above together and sprinkling on some magic dust, the HYG should pull back now in the days ahead. After weakness for a few days or week, price will likely recover back up to current highs for a week, then roll over for significant downside for a few weeks duration into September. HYG then should recover again and print a potential multi-year top in September-November. HYG may target 84-ish over the coming days and week or two, then back up to 85-86, then roll over lower targeting the gap at 82.5-ish and 81.5 support. Then a recovery. Keystone does not hold a position in HYG currently but may put on shorts following the path of the analysis above. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.