Joe Friday: "Junk Bonds Look Bearish and Could Break Support"

June 3rd, 2013
in contributors

by Chris Kimble, Kimble Charting Solutions

This post was originally published by

High Yield ETFs JNK & HYG have formed bearish rising wedges. Two-thirds of the time, prices end up lower in the future after forming this type of pattern. The support lines of the rising wedges are being tested very hard and appear to be giving way right now.

Follow up:

Click to enlarge

This pattern becomes very important with the effective yield on high yields at the lowest levels in 20 years plus (most overvalued ever), reflected in the chart below.

Click to enlarge

Joe Friday:

"Effective yield has formed a bullish falling wedge at (1). This pattern suggested higher yields two-thirds of the time. If yields do move higher, the majority of the time stocks end up lower in price."

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