Tuesday, May 23, 2017

HYG High-Yield Corporate Bond ETF Weekly Chart; Overbot; Rising Wedge; Negative Divergence; Price Over Extended; Upper Band Violation

The high-yield bond ETF's such as HYG and JNK are at record levels. The party is in full swing with bankers in custom-tailored Armani suits drunk as skunks swinging from chandeliers and dancing on the conference room table while donning lampshades on their big heads. Investors are euphoric and optimistic about higher prices ahead. The boat is fully loaded to one side.

That rising red wedge is ominous. The collapses from rising wedges can be quite dramatic. If you are in these or similar instruments start leaving via the back door do not stick around anymore. Stochastics and the RSI are overbot open to seeing some downside ahead. The red lines show negative divergence with all indicators as price prints new highs. This is the same on the daily and 2-hour chart and the HYG and JNK charts are interchangeable. Neggie d forecasts a spankdown for price coming at anytime.

Price is over extended to the upside well above the moving averages needing a mean reversion lower. Price has violated the upper standard deviation band (pink) so a move back to the middle band, now at 86.88 and rising, is on the table, as well as the lower band at 85.25 and rising.

Keystone does not hold a position as yet but will be shorting HYG and/or JNK or similar instruments starting today. 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.

Note Added Monday Morning, 6/5/17: HYG gains +0.4% last week to 88.58. The upside party in HYG continues.

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