TLT is long term low yield government bonds. JNK is corporate high yield high risk bonds. The chart shows that we are near the golden pocket fib retracement level as well as a long term support zone. This could indicate a potential rotation back into government treasuries.
Junk weekly showing heavy downside momentum but possible red inside candle. The weekly stochastic is turning from over sold. Should see support here (at least short term) before you see it in stocks. Lets see.
This is the ratio of High Yield Bond ETF to the 20Y T BOND. Not a ratio seen a lot but on the 1M time-frame it provides some perspective to the periods of high volatility/ correction on stocks. The blue trend-line is the Dow Jones (DJI) index (stocks). As you see, every time the JNKTLT ratio hit its Lower Highs trend-line, stocks have turned sideways at best,...
The JNK ETF is heading further down with a big bearish Marubozu that is the YTD low -> Bearish for equities.
The IWM ETF is also heading further down for a lower low with a bearish Marubozu engulfing -> Bearish for equities
The DJT ETF ended on a recent low too -> Bearish for equities
The VALUG has a bearish candle for more downside -> Bearish for equities
This long term chart of JNK shows that the price is currently in a down trend within a larger down trend. The slope of the down trend is also steeper than the long term support up trend. My own view is that this thing is a ticking time bomb. Continuing to follow.
JNK (junk bonds - aka corporate riskier debt) / TLT (20 year bonds):
Rising level means risk-on appetite for the market
Dropping level means risk-off.
We just peaked, however we could still see sizeable last market parabolic rally.
... similar to my previous analysis. We can see that risk-appetite, as indicated by junk-bonds, is at or close to an important support level. A short-term level might thus be expectable in SPX (which is overlayed). Afterwards, good night US led hegemony of western capitalism :o
PS: If you really read this analysis, check the previous one to compare both...
I plot BLX (which is BTC) along with JNK/TLT ratio.
JNK/TLT ratio is (Junk Bonds ETF) / (20 year bond ETF ) . This ratio can serve as an indicator, to show if the market is loving risk or loving safety on a macro level. Risk on to risk off ratio. You can see that the JNK/TLT ratio correspond with market bull & bear cycles. Notice the JNK/TLT tops form a trend...
US Treasuries (IEF ETF) vs Sub-Investment Grade Debt (JNK ETF): Credit spreads have remained subdued however traders should be monitoring the 1.08-1.09 level (pivot zone) for evidence of increased stress which may ultimately be reflected in the equity market.
Back on Jan 5th, 2022 I posted that junk bonds were breaking key area.
One month later it's collapsing as expected. This is very bad for Zombie companies
as their borrowing costs rise without pricing power, how will they deal with rising
unit labor costs and raw material inflation?
Interesting... in the last couple of weeks, as the Leading Indicators signaled a retracement, it appears that it may be time for a technical bounce...
JNK broke down as expected, and exceeded target. Last week's candle had a long tail recovery, and this current week is forming a rebound.
MACD still in bear territory.
IWM, DJT and VALUG all seemed to have...