Junk bonds, stock prices, and trendlines

High-yield bonds have had a tremendous run as predicted by our The Peter Dag Portfolio.

As you know I like to use trendlines (see previous posts). The one I used on the gold chart has been quite right in predicting the recent move in gold.

Something has happened recently that has caught my attention. The chart of JNK (the ETF for high-yield bonds) has an interesting pattern (click on the chart to enlarge it). JNK has violated a trendline spanning 6 months. This, in my view, is an important break because of the length of the trendline.

My interpretation is that high-yield bonds may be close to a period of consolidation.

This change in trend could have important repercussions for the financial markets.

To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.

I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.

George Dagnino, PhD
Editor, since 1977