WORRYING TECHNICALS IN HIGH YIELD CREDIT
JNK is at or very close to what we believe to be initial overhead resistance and completing "a" of an "abc" corrective retracement.
The ramp job in HYG Junk Bonds has also been impressive, but it DID NOT reclaim its former bull market trend-line (blue line). All it’s done is open a descending megaphone pattern that will see it crash to new lows shortly.
Similarly, Investment Grade bonds (LQD), which have been ramped higher, have just slammed into resistance (top blue line). They too suggest we’re going to new lows shortly.
Finally, the 10-Year Treasury yield has broken down from a falling wedge formation. This suggest Treasuries will be rallying HARD, meaning capital is fleeing into them.