Friday, January 23, 2015

Corporate High Yield Bond ETFs (HYG, JNK) - Breakout from Pennant and Momentum Resistance

Corporate High Yield Bond ETFs (HYG and JNK) appear to have broken out from near-term pennant pattern resistance and are also attempting to break above momentum (RSI) resistance (upper part of chart), as shown on the daily closing price charts below.

These ETFs are still within a multi-month descending channel, as shown on the charts, but are above long-term rising support extending back to 2009 (as shown in the HYG chart below only and in previous posts).

The breakout above pennant resistance is a short-term move but may be a positive sign for high yield bonds since it is most often a "bullish" continuation pattern following a sharp increase (in this case the price increase off the mid-December lows).  The breakout also occurred while crude oil was moving even lower.

We also note that an important (in our opinion) corporate high yield bond mutual fund (NHINX, Institutional Class) also displayed positive price action the last two days of this week despite crude oil's difficulties.

Click Chart to Enlarge

Click Chart to Enlarge

Not Investment Advice | Important Disclaimer: 
The content in this article, including the identification and discussion of any specific security (e.g., bond fund), is NOT meant to be and should NOT be construed and/or used as investment advice. This article is for general information and educational purposes only. Please read the Disclaimers  for in their entirety. The U.S. Securities and Exchange Commission website has guidance on selecting an investment adviser.

Financial Disclosure:
The author/publisher has positions in several corporate high yield bond mutual funds at the time this article was written

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