MUB Municipal Bond Fund Daily Chart

Keystone posted this daily chart, and the weekly chart, for MUB on 9/27/11 pointing out the negative divergence across all indicators, on both sets of charts, indicating a smack down on tap, the kiss of death. 12 trading days later we see the patient ill and stumbling lower.  It is also fitting to review MUB in light of Harrisburg, Pennsylvania, going belly-up today. Remember, all the pundits told you the muni's were wine and roses and to buy at 107. Keystone projected down to 105 and then to take another look, so here we go.

Note how price fell under the 20 and 50 MA's which is bearish. If the 20 MA falls under the 50 MA, that will confirm continued weakness.  Over the last week, price came down to 104.7-ish and bounced.  The RSI, MACD line, MACD histogram and stochastics (red circles) are all lower values compared to the last few months, however, indicating further negativity. Over the last week, the stochastics shows a sliver of positive divergence that helped bounce price today, creating that hammer doji. This current print at 105.4 represents the neck line of an H&S shown by the dark green lines; head at 107.4, neck at 105.4 would target 103.4. Interestingly, note how 103.4 is strong horizontal support and a gap fill area, thus, a confluence area increases its target potential.

Since price already took a tumble off the top, some further relief to test the 50 MA, and/or the 20 MA from the underside would be in order.  There is a gap fill needed at 105.6-ish. Also note that the top call was with the rising blue wedge pattern shown, and that lower blue trend line from the summer failed late September, price came up for a back kiss to form that right shoulder at 106.8, then rolled over on its sword. Note the lower channel at 102.2-103.0 that is a likely target as the year moves towards an end and we move into 2012.

Hang on Meredith, reinforcements are on their way. Price can move up to test the underside of the MA's, but the neck line could very well spank it down immediately again. Regardless on how the next few days play out, the current target in play is 103.4-103.7, then we can take another look, probably the lower channel is on tap after that.  Considering that CNBC tv had another 'stomp on Meredith fest' ironically on the same exact day that Keystone posted the gloomy outlook for the muni's a couple weeks ago, the price action says that the uber euphoria over buoyant muni's most probably called the top that day.

Meredith's tv appearance on 60 Minutes in the Fall of 2010 was at the 103-ish level when her call on troubled muni's was made, only a couple points lower than now. Projecton is sideways to sideways lower as time moves along targeting 103.5-ish. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or on any links attached to this site. Consult your financial advisor before making any investment decision.