Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Can The Market Bounce If Junk Bonds Sell Off?

By Michele SchneiderBondsNov 23, 2021 11:42PM ET
Can The Market Bounce If Junk Bonds Sell Off?
By Michele Schneider   |  Nov 23, 2021 11:42PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

The small-cap Index Russell 2000 (IWM) looks hopeful for a Wednesday bounce while the High Yield Corporate Debt ETF (JNK) sends another warning sign.

Though we are watching all major indices, IWM is the most interesting since it found intraday support near its 50-Day moving average at $228.06. It should be noted that none of the other major indices are as close to a major moving average as IWM.

IWM-JNK Daily Chart
IWM-JNK Daily Chart

On the other hand, High Yield Corporate Debt (JNK) has recently broken main support at $108.06. This shows that investors’ appetite for risk has waned as JNK tends to move higher in a bullish environment. Therefore, if IWM is going to turn around, we should also watch for JNK to do the same.

Nonetheless, if IWM pushes higher while JNK continues to break down, a bounce could be short-lived. However, with a potential bounce setting up, let’s look at the strongest members of Mish’s Economic Modern Family for trade ideas.

Currently, Transportation via iShares Transportation Average ETF (NYSE:IYT) and the Regional Banking sector via SPDR® S&P Regional Banking ETF (NYSE:KRE) are the top performers of this week.

IYT - KRE Daily Chart
IYT - KRE Daily Chart

As seen in the above charts, KRE along with IYT was able to close over the prior day's low showing extra strength compared to IWM which closed almost flat on the day at -0.26%

With that said, for Wednesday, watch for KRE to clear resistance at $75.59 and for IYT to stay over its 10-DMA at $275.83. These will be pivotal levels for each to clear or stay over.

One last sector to watch is Retail (XRT). If transportation can head higher, watch for XRT to follow as both at times can trend together.

ETF Summary

  • S&P 500 (SPY) 464.45 new support to hold.
  • Russell 2000 (IWM) 228.06 support the 50-DMA.
  • Dow (DIAWatching 355.34 to hold.
  • NASDAQ (QQQ) Was able to close over the 10-DMA at 396.70, however, has better support from Tuesday's low at 392.92.
  • KRE (Regional Banks) 75.59 resistance.
  • SMH (Semiconductors) Watching to hold over the 10-DMA at 303.52.
  • IYT (Transportation) 270.89 support.
  • IBB (Biotechnology) Needs to hold over 152.41.
  • XRT (Retail) Watching to hold over the 10-DMA at 102.32.
  • Junk Bonds (JNK) Watching to find support.
  • SLV (Silver21.79 the 50-DMA.
  • USO (US Oil Fund) Looking for a rally back to highs.
  • TLT (iShares 20+ Year Treasuries) 144.46 support area.
  • DBA (Agriculture) 19.92 the 10-DMA minor support
Can The Market Bounce If Junk Bonds Sell Off?

Related Articles

Tim Knight
Time To Short Bonds By Tim Knight - Jan 20, 2022 1

I’d like to suggest this is an opportune time to short bonds by way of iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT).This is based on an enormous topping pattern that I perceive...

These Are The Top Ten Nontraditional Bond Funds By ValueWalk - Jan 16, 2022

Nontraditional bond funds aim to avoid losses and earn a return that is uncorrelated with the overall bond market. Such funds deploy several strategies to achieve their objectives,...

Can The Market Bounce If Junk Bonds Sell Off?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Shoukat Ansari
Shoukat Ansari Nov 24, 2021 6:29AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
gold report??
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email