Thursday, April 16, 2015

HYG - Weekly and Daily Chart Analysis Indicates Rally May Continue?

The weekly closing price chart for Corporate High Yield Bond ETF HYG suggests the high yield bond rally may continue, at least for a while.  This chart suggests resistance would be encountered above 93, depending on the rate at which the rally continues, since the resistance line is rising.

As the chart shows, HYG has broken through a falling resistance line (dashed red) and remains below the rising resistance line (solid red) that lead to a short-term correction.  

HYG also remains above a long-term support line (solid green) and is relatively neutral in terms overbought/oversold per RSI (upper part of graph).

Click Chart To Enlarge

The daily chart below shows the breakout through falling resistance but also suggests that HYG may encounter some resistance around the $92 level. This line can also be drawn on the weekly chart, so in our opinion, some caution may need to be exercised sooner than later as the current price is about $91.30.

Click Chart to Enlarge

We remain long U.S. corporate high yield bonds after re-establishing a position via several mutual funds on March 26, 2015.

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 owns several corporate high yield bond mutual funds at the time this article was written. This position may change depending on future price action.

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