The Market's Junk Problem

Content adapted from this Zerohedge.com article : Source

Authored by Sven Henrich via NorthmanTrader.com,

This might not be of the magnitude of Michael Milken and the junk bond mess of the 1980s but the market has a junk problem.

$JNK is a high yield bond ETF that serves as a good technical indicator of late.

This ETF was on a solid uptrend only to stall out in January. It pulled back before the market which followed it lower. After bottoming, it tried to retake resistance and failed twice.

Note the 2 attempts to recapture the trend line these past 2 weeks. Both attempts failed precisely at the trend line and each time produced selling in markets including this week.

As long as $JNK stays above the 35.70 gap odds for a big rally are improving. Fall below the gap and markets may make new lows or retests lows.

But as long as $JNK remains below the broken trend line markets are having a junk problem.

Non-adapted content found at zerohedge.com: Source

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