so in past posts ive discussed a way retail can play the curve steepener using tlt and hyg. its pretty apparant that the self inflicted "dis-inflation" is affecting all. this is kind of a robotic prespective of what the options market is seeing.
monthly open $85.55
1 standard dev +-
.75 standard dev
.50 standard dev
As can be seen on its weekly chart, the $HYG appears to be sending a warning signal. On a technical basis, a "Shooting Star" pattern has emerged, coupled with negative divergence in the SMI and RSI indicators.
To us, it appears that high yield bonds are sending a signal that its rallying may be getting a little stretched.
We would caution investors to tread...
SINCE PEAK IN CORP DEBT HYG AFTER THE 5 WAVE DOWN TO PANIC LOW 2009 WE HAVE BEEN WITHIN A LARGE TRIANGLE ONE WAVE COUNT RAISES A FLAG ANOTHER SEE US GOING TO 90.50 AND ONE PEAKS NEAR 88.50 ARE WE READY TO BREAK AWAY FROM THE PAST OR ARE WE BOUND TO IT . I AM NOT SURE . BEST OF TRADES !!!!
this is a ghetto nobs trade for a retail investor using bond etfs. its a way of taking advantage of current tightness in bond spreads but likelyhood for expansion of spreads post fomc. in this scenario we'll use hyg (corporate credit) as a proxy for short term notes and tlt as a proxy for long term bonds they have a very nice inverse correlation to one another. so...
Max Profit: $173/contract
Buying Power Effect (Cash Secured): $8026
Break Even: 80.26/share
Notes/Comments: Up to this point, I haven't posted many of my IRA trade ideas, primarily because they are way longer-dated setups than people are generally interested in, and I've also been an infrequent buyer of the underlyings that make...
Can central bank liquidity provision (or the talk there of) be enough to provide an incentive to reach for yield, or will credit spreads begin to widen (again). Stay tuned. From the this chart above it appears we are winding into a decision point.
Hilarious drop and bounce back for corporate bonds. Missed out on that one, HYG has low options premiums. Also, note how it drops after rate hikes are announced, no anticipation at all so there's an opportunity there in the future as well.
If any of my followers are bond experts, feel free to chime in. Thanks.
Expect a small climb or some consolidation to allow for the oscillators to reach close to overbought and/or recoil on the down trend line.
Look to short in or above the value zone- reviewing the oscillators.
Stop Loss 1.5 ATR Channel