MUB Municipal Bonds Weekly Chart Rising Wedge Negative Divergence

Time for an update on the muni market. The Fall 2010 area was when Meredith Whitney made her famous, or infamous call, depending on whether or not you are a shell for the muni market, in that 102-ish area. So price remains four points above her initial call currently. During 2011, the strong run vertical is stunning, from the 93 bottom to the 106 top in a half year.  The blue rising wedge and negative divergence made the pull back in Fall 2010 an easy call.

Interestingly, at the bottom, the money flow was the only indicator that wanted a bounce due to positive divergence, the other indicators want to see at least a matching low again in the 90's in the future.  Price sky rocketed anyway into the teal rising wedge at 106-ish where Keystone called the top with the firm negative divergence.  Price received the spank down forecasted and has now moderated sideways printing a matching high compared to the September high. Note that the indicators all remain in negative divergence (purple lines) so another spank down will begin now. The 20 week MA above the 50 week MA is actually a feather in the bulls cap. Watch price in relation to the 20 MA since this will be the first sign of major downside ahead.

Projection remains for sideways to sideways lower prices for the foreseeable future. A move towards 102 is expected for 2012. 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.