👀 Ones to watch: Undervalued stocks to buy before they report Q3 earningsSee Undervalued Stocks

2023 Could Be All About Junk Bonds

Published 01/04/2023, 12:28 AM
Updated 07/09/2023, 06:31 AM
HYG
-
JNK
-

Now that we are one day into the new year, there are 2 pieces of advice we can give you.

First, is to learn a strategy and then become a specialist in that strategy.

For example, why not pick phases? We love them. And, once you understand the phases on a daily and weekly timeframe, your trading will vastly improve.

Secondly, learn to follow bonds. Sure, short-term bonds work well as do the 20+ year-long bonds.

However, we are all about the high yield high debt junk bonds.

We basically use the bonds to determine risk on/off. And we find that quieting the noise, especially with the dreary forecasts for this year, helps us trade a lot better.HYG Daily Chart

The chart of iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) (or SPDR Bloomberg High Yield Bond ETF (NYSE:JNK) if one prefers) has been an excellent guide to the short and long-term market moves. It also keeps us out of harm’s way during the chop.

In June 2022, HYG bottomed. So did the market. Then, HYG had a phase change in July but could not quite get going enough to clear the 200-DMA. And so, the market sputtered.

Then the sharp reversal candle in October gave traders a good bottom risk point. The ensuing rally took the price right up to the December high and the 200-DMA.

Currently, HYG sits right under the 50-DMA. It also closed green on a red day in the indices.

That tells us that risk appetite remains regardless. HYG outperforms the SPDR S&P 500 (NYSE:SPY), and the momentum had a bullish cross while the momentum trades above the moving averages.

And most importantly, as experts in phases, it tells us to watch that 50-DMA carefully.

ETF Summary

  • S&P 500 (SPY): 375 support and 384 resistance
  • (iShares Russell 2000 ETF (NYSE:IWM)): 170 pivotal support and 175 resistance
  • SPDR® Dow Jones Industrial Average ETF Trust (NYSE:DIA)): 325 support and 334 resistance.
  • Invesco QQQ Trust (NASDAQ:QQQ): 260 support and 267 resistance
  • SPDR® S&P Regional Banking ETF (NYSE:KRE): 56 support and resistance 61.
  • VanEck Semiconductor ETF (NASDAQ:SMH): Support is 196 and 205 resistance.
  • iShares Transportation Average ETF (NYSE:IYT): 210 pivotal support and 215 is now resistance.
  • iShares Biotechnology ETF (NASDAQ:IBB): 127 is pivotal support and 133 overhead resistance.
  • SPDR® S&P Retail ETF (NYSE:XRT): 57 pivotal support and 63 is now resistance. Holding 60.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.