Are Junk Bonds Suggesting Stock Market Top Is Near?

European Bear Market Rallies Peaking Here?


As investors, we have several tools and indicators at our disposal.

Whether it is technical indicators such as Fibonacci levels, moving averages, or price supports, or fundamental indicators such as corporate earnings or economic data, we have a lot of information to use when making decisions.

Today’s chart incorporates both. Junk Bonds play a critical role in highlighted investor sentiment. When junk bonds (lower-rated debt) is performing well, then that means investors are taking more risks. When junk bonds struggle, that means investors are taking on less risk.

So today, we highlight the Junk Bond ETF (NYSE:). Using technical analysis, we can see that JNK is trading near line (A), a price level that has served as support and resistance over the past several years. It is currently serving as price resistance.

At the same time, there is a divergence between the stock market (the made new all-time highs) and junk bonds (well below all-time highs and 5% off 2019 highs).

So this is an important resistance test for junk bonds. Will Junk Bonds (JNK) break down from here (bearish) or break out (bullish)?

What happens here will send an important message to stocks – and investors.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



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Chris Kimble


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