Traders should pay close attention to the junk bond market over the next few days…
The action in junk bonds tends to lead the action in stocks. So, it’s worthwhile to note that the chart of the High Yield Corporate Bond ETF (HYG) is looking vulnerable.
Take a look…
HYG closed below its 50-day moving average (MA – the blue line) on Monday. It’s not a dramatic decline …yet.
So, maybe it’s just a quick bluff lower.
But, keep an eye on the shorter term 9-day and 20-day exponential moving averages (EMA – the red and green lines). They’re on the verge of crossing below the 50-day MA. This sort of “bearish cross” often leads to a much more significant decline.
In fact, the last time we got a bearish cross on this chart was back in late February. The junk bond market collapsed over the next few weeks. And, most folks probably remember what the stock market did during that time frame.
So, let’s not get too bearish just yet. It wouldn’t take much for junk bonds to rally back up and push HYG back above all of its various moving averages.
But, if the decline continues – or if it starts to accelerate – and the 9 and 20-day EMAs cross decisively below the 50-day MA, then high-yield bonds are likely headed lower for the next few weeks. And, the stock market will likely suffer the same fate.
So, like I said, traders should pay close attention to the junk bond market over the next few days.
Best regards and good trading,
P.S. When it comes to investing, most people follow the wrong advice. They’re told to buy and hold stocks, while following the traditional method of investing. All in hopes that they will have enough to retire someday…
But, I went the opposite route and was able to retire at 42 all by using one method and ignoring all the “experts” advice.
By using this simple and effective way to multiply my money, you can attempt to retire early, too. It only takes 5 minutes a week to possibly make triple-digit gains.
As a Jeff Clark Trader subscriber, you’ll have access to this powerful trading strategy and could easily fund your retirement just like I did. Click here to find out more.
Due to this week’s volatility, have you been keeping up with Jeff’s indicators to decide when it’s the right time to buy or sell? Has it made you any gains lately?
Send us your thoughts – and any questions you may have – to [email protected].
In Case You Missed It…
Can you imagine investing just $1,000…
And within 8 weeks, it turning into a $7,660 profit?
Sounds crazy right?
But that’s exactly the kind of gains you can see using the 5 Minute Money Multiplier technique.
And it’s the kind of returns I’ve been generating throughout my 24 year career as a money manager where I ran a $200 million money management firm…
Today I want to share it with you.
Watch this urgent bulletin to find out how you can start to profit in a matter of weeks.