Stocks Want To Know What Junk Bonds Will Do Next
Chris Kimble | Sep 13, 2016 10:57AM ET
Junk bonds are often viewed as leading indicators for the stock market. Rising junk prices are usually greeted by stocks in a positive way and weak junk prices are often viewed in a concerning way.
JNK faced a triple breakout test at (1) a few weeks ago, with momentum at very lofty levels. Since hitting the breakout test, JNK has been a little weak.
JNK is now testing rising support of a potential bearish rising wedge at (2). Risk-on trade in stocks would like to see a breakout at (1).
If JNK breaks support at (2) and turns weak, historically it has meant that stocks have struggled to make large upside gains.
h3 Bottom Line/h3Junk is at an important price zone.
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