LQD Corporate Bonds Daily Chart Overbot Rising Wedge Negative Divergence Potential Island Reversal

LQD daily chart shows how price was fighting the 20 and 50-day MA's in November-December, deciding to roll over, when the easy money printing presses started dropping money from helicopters. Note the island formed now above 115 since price gapped up from 114 to 115. Thus, an island reversal pattern may be on tap on the way down where price collapses back down thru the same gap. At any rate, the 114-115 gap is juicy and will require filling at some ponit forward.

The blue lines and rising wedge create the negative divergence smack down, price dribbled off the top. Note the money flow green line, thus, price is performing a little stutter step higher to satisfy the money flow, but, in quick order, she should roll over and test the 20-day MA for starters in the days 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.