Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Bonds Still Friendly to the Bulls; Currencies Are Close, but Not Quite There Yet


Bulls are claiming victory in certain of our key tells, but the game isn't quite over yet.

Remember where we are in the big picture in interest rates. The monthly chart below shows just how miniscule a move up to the 1.955% to 2.473% range would be in the macro sense. Sometimes when we see rates in the 1.548% - 1.75% range for such an extended period of time, we tend to think that such moves are out of the realm of feasibility – don't you believe it!

Click to enlarge

High yield bonds are still pulling their weight for the bulls.

The SPDR Barclays High Yield Bond ETF (NYSEARCA:JNK) has had three bullish developments recently. First, there was the bullish reversal candle that took place on November 16 (see the bottom green circle). That reversal turned a very conspicuous bearish chart to a neutral chart in one session). Next, we saw JNK close above horizontal line resistance at $39.98 on the 19 (see middle green circle). Finally, over the last few sessions, JNK managed to close above its 60-day moving average and then proceed to put some distance between it and the average. The second and third technical developments have turned JNK's chart from neutral to bullish – certainly one where you'd want to be buying dips when they occur.

Click to enlarge

Emerging markets bonds echoing the bullish action in JNK.

The iShares JP Morgan Emerging Market Debt ETF (EMB) crossed above its 14-day moving average over the last week and a half and has done a nice job of extending its gains since that breakout. The bulls can claim victory in this short-term battle just as with the JNK chart.

Click to enlarge


I am inching my way towards being more constructive on the prospects for the risk markets with the bullish messages coming from bonds. Still, though, I would love to see real breakouts occurring in the key risk currencies as a confirmation of the positive action in stocks and bonds. If we get the breakouts in EURUSD and AUDUSD, I will be leaving my bearish friends behind and jumping into the bulls' camp!

Twitter: @tttechnalytics

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos