JNK High-Yield Junk Bonds Daily Chart Overbot Rising Wedge Negative Divergence

The junk bond daily chart shows a textbook blue rising wedge which is bearish, as well as the overbot conditions and the negative divergence (blue lines). This is a chart that firmly wants price to head lower and could care less about price coming back up again. A bounce is shown for the projection to satisfy the weekly chart. This daily chart is firmly bearish across the board so price will be smacked.

A pink inverted H&S pattern is highlighted but before junk bond junkies become too overly bullish, the target of 43 is unlikely. Keystone only uses inverted H&S's after long down moves. JNK, however, has been in a long up move, therefore, the pink inverted H&S holds no credibilty with Keystone. It is presented here since you will hear other technicans comment on this pattern for other stocks and indexes, and Keystone's opinion goes for them as well. Perhaps in the summer if there is obscene money printing by central bankers, sure, maybe JNK sneaks upwards to 42-43, but, with the factors described above, take the money and run. In fact, do not look back.

The money flow low in November is very ominous. Price never came back down after the November low to rectify this 'situation' with the money flow. Therefore, price will eventually need to make its way down to tie up its loose ends. JNK is topping currently, there is nothing here that is attractive from the long side, projection is lower prices for the months ahead. 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.

Note Added 3/6/12 at 6:30 AM: Interesting timing to post the LQD, JNK and HYG charts since news hits that companies stampeded into the U.S. corporate bond market with 10 deals floated on Monday. This is going to end very badly.