Junk Bonds … just think of em’ this way…risk investments and a yield play. in a volatile world, they aren’t so smart so institutions try to get out of them. keep it simple … note coming into the 2009 low they were crashing .. a nice bounce and then meandered around into June 2014 then started to crack. Most recent price action has seen some heavy selling pressure w/ the first noticeable gap down occurring last week AND (this is important) the lowest weekly close since August 2009.
Note the dashed black boxes .. those were all attempts at trying to get below but were defeated. What’s the positive spin? Well, as you can see from the first chart below this level (35) was ID as a pattern and it hit and held for now. Why for now? Well a gap down and some “selling candles” make it probable that we could lose this level to the downside. HOWEVER, if history is our guide, their has been a snap back rally since 2009 each time this level was defeated .. so, watch for strength! a small, dead count bounce isn’t good and will tell us if something is a foot at the circle K so to speak ….
Here is JNK as of Sunday night … over the coming days, expecially Tuesday, monitor this pattern closely for a directional bias and a “risk on” vs “risk off” appetite w/ regard to volatility.
Hope your having a good end to your weekend.
Bart
