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Just a Bunch of Junk


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#1 Douglas

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Posted 16 May 2023 - 12:40 PM

I will feel a lot better about being all giddy and bullish if JNK would just break the top red line in the triangle in the diagram below eliminating its current divergence with SPY in black.  If JNK breaks the bottom red trend line with some conviction, then I think it might just be adios hasta la vista time.  

 

6Qqiz2n.jpg

 

Regards,

Douglas

  



#2 slupert

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Posted 16 May 2023 - 01:31 PM

I will feel a lot better about being all giddy and bullish if JNK would just break the top red line in the triangle in the diagram below eliminating its current divergence with SPY in black.  If JNK breaks the bottom red trend line with some conviction, then I think it might just be adios hasta la vista time.  

 

6Qqiz2n.jpg

 

Regards,

Douglas

  

nice, Thank You.



#3 fib_1618

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Posted 16 May 2023 - 01:34 PM

Data through last Friday.

 

http://www.technical...hjunk051223.png


breadthjunk051223.png


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#4 Douglas

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Posted 16 May 2023 - 02:26 PM

Fib_1618, I've been tracking the Finra advance/decline data on junk and investment grade bonds for a while now too just to see if they might give good trading signals at turns.  My data plot below for junk bonds also shows a negative relative divergence with the DJIA.  

 

JvUx8qE.jpg

 

It will be interesting to see if this divergence presages a market turn of some importance, or instead if the junk rights itself and gets back in step. 

 

Regards,

Douglas



#5 pdx5

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Posted 16 May 2023 - 04:00 PM

Some talking head on CNBC said today he likes longer maturity Treasuries. Because he sees interest rates coming down significantly from here.


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#6 Douglas

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Posted 16 May 2023 - 05:16 PM

pdx5, I have no idea where rates are going in this Fed distorted, non-market discovery interest rate fantasy world.  Currently the long bond yields 3.87% in a 5% inflation world (if you believe the heavily massaged BLS numbers, 8.5% inflation if you believe shadowstats).  That's a negative 1.13% real return.  In the Fed 2% inflation target world the real yield is still only a lousy 1.87% at current long bond prices.  Can the yield go lower if the economy slows, you betcha.  How low, who knows.  In a world where the Fed is willing to pad their balance sheet with countless billions to manipulate rates, lower rates is probably a good guess.  

 

Eventually, of course, economic reality will brutally reassert control and demolish this house of cards, but as the father of economic pumping, John Maynard Keynes, once said "The markets can remain irrational for longer than you can remain solvent."  So picking a crazy near future bond yield is currently probably quite rational.  In the land of the mad insanity rules.

 

Regards,

Douglas