HYG High Yield Corporate Bond ETF Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Price Extended

The HYG monthly chart is the same as the JNK chart so the same technical analysis holds for each. Typically, trouble in the broad stock market begins after the high yield arena becomes ill and HYG is rolling over. The RSI and stochastics are overbot agreeable to a pullback. Money flow is coming off overbot territory. The rising wedge pattern is bearish.

The red lines show negative divergence across all indicators. It appears that this is as good as it gets for HYG and JNK. A neggie d slapdown is on the table in this monthly basis. That means a downward bias for many months to come perhaps a year or two.

There is a lot of spaghetti in the chart so you may have to bring up a cleaner version. You can see the price violated the upper standard deviation band back in 2016 and early 2017 but has yet to show respect to the middle band, the 20 MA, at 84.08 and rising. HYG did the same thing in late 2011, through 2012 in to 2013 and then you see how price came all the way down to tap on the middle band to show respect. A similar fractal may play out going forward.

The purple boxes show the strong downtrend in high-yield during the 2008-2009 market crash. HYG was falling through 2008 and then bottomed March 2009 like all other equities because the Federal Reserve stepped in to save the stock market and protect the wealthy elite class in America that own large stock portfolios. It worked. The rich always protect their own. The down trend was very strong and that petered out as 2010 began overpowered by the power of the Federal Reserve. The central bankers are the market.

HYG began a multi-year rally into 2014 where the trend was confirmed to be a strong uptrend by the ADX but then in 2015 that strong trend petered out and HYG collapsed. Right when the stock market and high-yield instruments were in collapse ready to flush lower in February 2016, the Fed rode in on its white horse again creating the Tweezer Bottom and more upside joy. The upside trend was very strong in 2016 as global central bankers collude to manipulate markets but that fun was short-lived. The ADX drops through 2016 and last year now at 21. Even though HYG is at record highs it is not a strong trend higher; instead the trend is weaker than the uptrend in 2014 and 2016.

Stick a fork in it. Its cooked. The only thing that can save high-yield now is news from central bankers or perhaps from the US government that would add a little more upside juice but as far as the chart goes right now, it's over. The expectation is for HYG to trend lower for the entire year forward. Keystone does not have a position shorting high-yield but both HYG and JNK are candidates.

JNK is trying to sneak out a higher high in the RSI so its top may be in the January April time frame. HYG may roll over slightly ahead of JNK. LQD is another one and would be expected to roll over and trend lower this year. Ditto MUB; even the muni ETF is set up negatively for this year. 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.