Connect with us

Hi, what are you looking for?

Metaverse CapitalistsMetaverse Capitalists

Stocks

Junk Bonds: Best Equity Predictor

Junk bonds are high-risk, high-yield bonds issued by companies with lower credit ratings. These bonds are also known as speculative-grade bonds or high-yield bonds, as they offer a higher rate of return than investment-grade bonds, but come with a higher risk of default. Companies that issue junk bonds have lower credit ratings because they may have a history of financial instability, may be highly leveraged, or may operate in industries with volatile revenue streams. Hence, they are the ultimate measure of risk on/off, because the nature of these bonds is, well, higher risk.

With CPI, PPI, on tap, the technical setup in junk bonds as seen on the weekly chart of HYG is very interesting. There are so many calls for recession, citing all kinds of reasons from declining money supply to more bank failures to a housing crash. However, to us (and, at this point, junk bonds) those calls are based on an old paradigm that, since COVID, has forever changed.

Just for giggles, how can we go into a recession when we were never really in an expansion or even a period of growth? 

COVID shut the economy down, but other than a return to normal, have we seen any real economic growth apart from the labor market? And, of course, the price of raw materials–but that’s a story for another time.

This, of course, supports a variation on the stagflation theme. Nevertheless, junk bonds are a hair away from confirming a bull flag. The breakout corresponds perfectly with the 50-week moving average. Should the junk bonds rally more from here, that takes them to the next level of resistance or the 200-week moving average at 78.00. Considering the bonds’ low volatility on an average day, that could take the market up to test August highs or around 430 in the SPY.

Of course, we must also consider that HYG does not break out. A move under 73.00 would mean risk off. However, the Real Motion Momentum Indicator shows a positive divergence, in that the momentum has cleared the 50-WMA before the price has.

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

IT’S NOT TOO LATE! Click here if you’d like a complimentary copy of Mish’s 2023 Market Outlook E-Book in your inbox.

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

Rosanna Prestia of The RO Show chats with Mish about commodities, macro and markets.

Mish talks opportunites in the market in this appearance on Business First AM.

Mish and Charles Payne rip through lots of stock picks in this appearance on Fox Business’ Making Money with Charles Payne.

Mish talks Beyond Meat (BYND) in this appearance on Business First AM.

In this guest appearance on the Madam Trader podcast, recorded March 20, Mish shares her journey from special education teacher to commodoties trader and now trading educator. Hear her insights on the spring 2023 market conditions and how to harness the right skills to succeed.

Follow Mish as she breaks down current market conditions for her friends across the pond on CMC Markets.

Mish talks about Dominion Energy with Angela Miles in this appearance on Business First AM.

Coming Up:

April 13th: The Final Bar with David Keller on StockCharts TV and Twitter Spaces with Wolf Financial

April 24-26: Mish at The Money Show in Las Vegas

May 2-5: StockCharts TV Market Outlook

ETF Summary

S&P 500 (SPY): 2 inside trading days in a row, so range break good to follow.Russell 2000 (IWM): 170 support, 180 resistance.Dow (DIA): Over some recent consolidation, so watch 336 to hold.Nasdaq (QQQ): Also 2 inside trading days in a row, so range break good to follow.Regional Banks (KRE): 41.28 March 24 low held; now has to clear 44.Semiconductors (SMH): 258 resistance with support at 250.Transportation (IYT): Confirmed phase back top. Caution from Bearish–worth watching, as this is demandBiotechnology (IBB): 130 major pivotal area.Retail (XRT): Also a good comeback, with 64 the next area to breach.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education

    You May Also Like

    Business

    In the UK, the care sector is under incredible strain, it’s good to know there are people working hard to address the issue. One...

    Business

    With the increased threat of industrial strike action looming across the UK, we consider whether a force majeure clause can strike the right chord...

    Politics

    On January 10, the French government announced plans to raise the retirement age from 62 to 64. The change would mean that after 2027,...

    Business

    Facebook is being challenged in the High Court over the personal details it collects on users in a case that threatens the company’s business...

    Dislaimer: pinnacleofinvestment.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 metaversecapitalists.com | All Rights Reserved