Thursday, December 29, 2016

HYG High Yield Bond ETF Weekly Chart; Overbot; Negative Divergence

The HYG high yield corporate bond ETF is displaying negative divergence across all indicators (maroon lines).The red lines show Keystone's top call for high yield back in late September early October. The red rising wedge, overbot RSI and stochastics, and neggie d across all indicators made the top call a highly likely event, and it occurred. That was a nice short trade.

The HYG bounces after the Trump election and is now higher than the October top. The maroon lines show universal neggie d in play again with overbot stoch's. Thus, the expectation is for a pull back in this weekly time frame. Keystone has no long or short position currently in the high-yield arena but will short HYG and JNK going forward.

The monthly chart is in negative divergence but has some shorter term juice in the monthly time frame. Thus, the weekly chart may create weakness in January, then a recovery, but likely followed by a significant top for the high-yield ETF, a multi-year top in HYG and JNK, printing, say, in the January-March time frame.

JNK and HYG are the same charts and the same technical analysis holds for both. The HYG will likely seek the inside of the sideways channel and bump along through the 82-86 area for early 2017. 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.

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