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One of the more noteworthy developments in recent days has been the move in risky high-yield bonds.  The SPDR Blmbg Barclays High Yield Bond ETF (JNK) fell 0.65 percent Thursday, bringing up its MTD lost to 2 percent, underperformed the S&P by a wide margin. Wall Street looks at high-yield bonds as a leading indicator for stocks.  Now the question is whether recent weakness is a pause that refreshes or it’s a beginning of something worse?  Below is an update look at a trade in JNK.

The graphic below is from our “U.S. Market Trading Map”, show the near-term technical bias and trading ranges.  As shown, the underlying is in a short-term bullish trend when the price bars are painted in green.  The underlying is in a short-term bearish trend when the price bars are painted in red. 

Chart 1.1 – SPDR Blmbg Barclays High Yield Bond ETF (weekly)

Our “U.S. Market Trading Map” painted JNK bars in red (sell).  After a strong run of outperformance since early 2016, JNK peaked in late July and rolled over.  This week’s downside follow-through confirmed last week’s bearish sell signal and pushed the ETF below the 50-period moving average – the level that offered support since the ETF broke above it in early July 2016.  This is a bearish development, suggesting more supplies are coming into the market…Click here to read more.

You see, our trend-following system is very unique as it attempts to pick turns before others see them. Timing is everything and if you’ve applied our system correctly, you should have made a killing in any markets.


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