JNK High Yield Bond Fund Daily Chart

JNK and HYG charts are essentially identical technical-wise so reference the HYG chart to see the weekly time frame. This chart shows the daily time frame over the last year. The blue wedge and negative divergence created the top and the spank down. Note the bounce off the 200 day MA in June, then the 200 day MA served as a resistance ceiling in late August. The lower low from June to August was met with lower indicators (red lines) indicating that lower prices were on the way. Lower low occurred as October began, RSI, MACD and histogram show positive divergence that bounced price, but note that stochastics and money flow are still not satisfied with the lows placed thus far.

The chart is agreeable to a lot of sideways movement moving forward but price will need to move down towards 35-36 again to place a more stable low. The last two lows may serve as a left shoulder and a head for a potential inverted H&S as the next few weeks play out.  JNK and HYG, having the same chart profiles, have each fallen more than MUB and LQD. MUB only started to break down two weeks ago, LQD is now breaking down. Thus, JNK and HYG may be showing the path ahead for MUB and LQD. This information is for educational and entertainment purposes only. Do not trade based on this information. Consult your financial advisor before making any investment decision.