Michele Schneider | Feb 06, 2022 02:26AM ET
Friday ended on a positive note with the Dow Jones (DIA) and the S&P 500 (SPY) holding over their 200-day moving averages. Alongside, Bitcoin cleared 40k and was looking for 41k next.
However, High Yield Corporate Debt—SPDR® Bloomberg Barclays High Yield Bond ETF (NYSE:JNK)—gapped lower Friday creating a key area to watch for underlying market strength or weakness.
The above chart shows how the DIA and SPY were both able to hold their 200-DMAs while the NASDAQ 100 (QQQ) and the Russell 2000 (IWM) sit near the middle of their current trading ranges as seen from the black lines.
While the major indices have key levels to clear and hold, we can also use JNK as an indicator based on investors' willingness to take on risky corporate debt.
What makes JNK so useful was its potential, large blow-off bottom it made Friday after gapping down.
Now we can watch for a reversal pattern based on it clearing the gap at $105.02. However, If JNK stays under Thursday's low, the stock market could still have more chop or consolidation to get through.
On the other hand, if JNK clears $105.02, we can look for short-term buying opportunities, along with watching for key resistance levels in the indices to clear.
h2 ETF Summary/h2
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.