While I believe that the markets are currently standing on the edge of a cliff and will not produce a new all time high, it's very important to note that price action is yet to confirm that, with the most significant catalyst of them all being Wednesday's FOMC.
Wednesday's FOMC is important because whether the Fed hikes again and how much they hike will determine...
$HYG looks like it's about to fall.
There's a H&S pattern forming on the 4Hr timeframe and price just rejected the 200DMA.
Should price break support at $73.05, I think we'll see a quick move down to the $69 region, maybe even lower.
I've taken some puts just incase this plays out.
In part 4 we look at the all in yield of investment grade (IG) and high grade (HY) credit, and why, despite OAS spreads resting at long term median, there still may be considerable investment value in the all-in-yields of short to intermediate maturity IG notes and ETFs. Understand, this discussion does not constitute an investment recommendation, only an...
As discussed in part two (prior installments linked below), the duration mismatch between LQD and HYG renders the ratio useless as a tool to assess credit distress or changes in investor preference. Credit ETFs, must be compared to a duration matched ETF, Treasury security or index to be useful.
There is also the difficulty in comparing spreads across investment...
Since credit has far greater potential to create systemic issues than does equity, corporate credit conditions are much more important to the Federal Reserve (Fed) than changes in equity prices. If you have interest in macro, monitoring and understanding the basics of corporate credit is a must have skill. If there is any one thing that might actually cause a Fed...
The Corporate bond market got extremely oversold and it bounced without the Fed having to pivot. Essentially the market got to 2013-2018 levels, and bounced nicely at the old support. But we still don't know whether the bottom is in or now, as there are more questions that need to be answered, like: Does the market expect the Fed to reverse course soon? Does the...
When economy faces drag lending and borrowing of USD tightens. Investors expect higher yield for taking more risk causing the spread to widen, and liquidity to increase this also shows expectations of future default risk. High yield spreads- option adjusted have bottomed and are now starting to slowly trend upwards. This is showing the market is not really worried...
LQD has just had 4 consecutive closes below the 21 ema, this may well be a sign of weakness in an already overextended market.
As you can see, LQD and the SPX have had a very tight correlation, particularly since the liquidity hose was turned on after the market crash in March. This is why a selloff in the bond markets, may very well forewarn of a potential...
Hello traders,
Description of the analysis:
The ETF market for high-yielding corporate US bonds is currently in an important support area that was until recently a resistance. Resistance turned into support with a highly volatile upward movement supported by high volumes. This is a clear signal of a growing willingness to invest in riskier assets. This zone has a...
The prices of high-yield bond ETFs went through the roof after the Fed announced that it would be buying them, but they came back down as investors realized that the central bank hasn't actually purchased any yet. Word on the Street is that they're about to start, though, so I went ahead and picked up a couple May 15 calls, and we'll see what happens.
Here's the...
Hi, thanks for viewing.
I think there is less demand for over-priced (subjective call) personal electronics at the moment. People are rightly thinking about more essential items, paying down debt, and increasing savings.
Probably worth pointing out how strong the 200 week moving average is as support - somewhere around 185, which is lower than people think....
NASDAQ:VCLT INDEX:DXY
I think there is some negative relation between $DXY and $VCLT.
Therefore watch out what the $DXY is doing Since it seems that when it goes up $VCLT goes down.
Dollar strength not good for long term corporate bonds it seems.
I imagine that it's because the market goes into short term treasury or longterm government bonds and avoids...
In earlier published idea, I indicated that corporate spreads would widen and that indexes (and lower quality corporate bonds) heavily invested in corporate high-yield bonds would suffer. This has since occurred, and will continue.
Thanks for viewing, I labelled this as "long" despite some as yet unexplained steep price reductions in the short to medium term. I did that because I saw that price drops were coming but that was just a signal to add to purchases, as opposed to sell.
Why do I expect price drops in the short to medium term?
1. Elliot Wave seems to indicate the ending of wave (3)...
HYG remains a strong sell.
Analysis Method: Fibonacci & Wave Theory
Monthly Chart:
High Wave Count:
Daily:
33 EMA Cross 50 EMA
Target: $67-$54
Will update.
FMW
