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Junk Bonds Starting To Rollover? A Concern For Stocks?

ByChris Kimble
Published 05/07/2019, 08:42 AM
Updated 07/09/2023, 06:31 AM

Junk Bonds

Are junk bonds about to send stocks a concerning message to stocks? They might be worth watching very closely for hints right now!

This chart looks at junk bond ETF (NYSE:JNK) over the past 6-years. Since 2017, JNK has created the falling channel (1). The rally off the bottom of the falling channel saw it hit the top of the channel and last years lower highs two weeks ago at (2).

While testing dual resistance it looks like the apex of rising wedge pattern was in play, as resistance was being tested.

JNK could be rolling over and breaking support at (3). As support could be breaking, momentum is the highest in the past couple of years and it could be rolling over as well at (3).

At this time the S&P 500 and Dow are currently testing last years highs. They would prefer that Junk bonds break out at (2), not rolling over at (3). Keep a close eye on JNK the next few weeks as it could send an important message to stocks.

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