Price on the High-Yield Corporate Bonds ETF (HYG) has weakened further since my late-January post.
It's now trading in between major resistance and support levels of 86.00 and 83.00, respectively, as shown on the following weekly comparison chart of HYG and the Russell 2000 Index (RUT). Volumes spiked to record highs on last week's decline and the momentum indicator has fallen below the zero level, hinting of further weakness ahead on this timeframe.
The HYG:RUT weekly ratio chart below shows that HYG has underperformed the RUT since March of 2009.
However, this ratio strengthened during the past two weeks and is now caught up in between the medians of longer-term and shorter-term downtrending channels, and is below major price resistance of 0.06. The momentum indicator has popped above the zero level on this timeframe.
So, if HYG drops and holds below 83.00, and if the HYG:RUT ratio drops below the shorter-term channel median (currently around 0.0555) on a momentum break and hold below zero, look for further weakness ahead, not only in HYG, but, potentially, in the RUT, as well.
Volatility in the RUT has exploded over the past few days, as shown on the following daily RUT:RVX ratio chart.
Price has fallen below its major support level of 85.00 and we'll likely see a bearish moving average Death Cross form in the next couple of days. As long as it remains below this level, we'll continue to see wild, volatile swings in the RUT, and, likely further weakness in the days/weeks ahead.
Welcome and thank you for visiting!
The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.
DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...
UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...
* Fri. Sept. 11 @ 8:30 am ET ~ MoM & YoY CPI & Core CPI Data
* Wed. Sept. 16 @ 8:30 am ET ~ Core Retail Sales & Retail Sales
* Wed. Sept. 16 @ 2:00 pm ET ~ FOMC Announcement + FOMC Forecasts and @ 2:30 pm ET ~ Fed Chair Press Conference
* Fri. Oct. 2 @ 8:30 am ET ~ Employment Data
* Wed. Oct. 7 @ 2:00 pm ET ~ FOMC Meeting Minutes
* Wed. Oct. 14 @ 2:00 pm ET ~ Beige Book Report
*** Click here for link to Economic Calendars for all upcoming events