LQD Corporate Bonds Weekly Chart Overbot Rising Wedge Topping Action Moving Forward

Corporate bond weekly chart shows a rising blue wedge with negative divergence across the RSI, MACD and stochastics, so a spank down is in order. Note, however, the green lines, especially money flow, with a long and strong profile, thus, price will need to come back up after a short sell off. Nonetheless this is topping action ongoing. A move back up to 118 would be on the table. A price close above 118 would be somewhat of a game changer since LQD will want to venture to 120 should that occur.

Projection is that price is topping in this area, reassess chart at 118 a couple weeks or so from now. Chances are that all indicators will show negative divergence when price comes back up signaling the top. The bag-holders are entering LQD now, so think long and hard about any long LQD positions. Price will probably provide a chance to jump ship when it comes back up, but considering the strong run upwards, again fueled by easy money starting in November-December, traders should take the money and run for it. If you sit it out a bit longer, do not overlook a gift where price comes back up to give you a second chance to exit. 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.