Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
The inset chart below shows that it's been a tough year for junk Bond ETF JNK, as its NAV return is in the red at this time, while the S & P 500 is up nearly 20% on a YTD basis.
At this time JNK could well be creating a bearish descending triangle as it is testing support of this pattern right now. If this support breaks, odds increase JNK declines to test support of its multi-year rising channel.
Two years ago, summer of 2011, Junk bonds reflected weakness against the S&P500 and in the end, SPY fell over 15% from August to October. Is JNK sending a message to respect? Is this nothing more than bond prices declines in a rising interest rate environment? Will it be different this time?
For information about Kimble Charting Solutions, send an email to firstname.lastname@example.org.