Tuesday, July 21, 2015

Key Corporate High Yield Bond MUTF Breaks Weekly Support - Back on Defense

Last Thursday (7/16) I posted (here) that I took a significant position in corporate high yield MUTF.  I was not patient enough.  Technical's encouraged me to sell that position yesterday.  I was anticipating (really bad idea) a breakout of the falling channel in the daily chart below, which did not happen.  Other funds had breakouts so I used that as evidence for making the investment, even though I have known for a long time that this fund should take priority as an indicator.

click chart to enlarge

In addition, the weekly support line has been broken in the chart below (dashed green line).  I was using this line, and a similar one on a daily chart, which was also broken, as stop loss triggers - so I sold (even though the week is not over).

click chart to enlarge

So despite the fact that I should have been more patient in the first place and not anticipated the breakout of the falling channel, my buy and protect strategy kept my losses to a fraction of a percent.

Note the weekly chart above has some other support lines for both momentum and price (solid green lines).  These are not predictions - I don't know what is going to happen. But whether I am on offense or defense, I always like to look ahead to see where the price may end up based on technical analysis.  In my opinion, a wise investor who uses technical analysis waits until the chart patterns are proven/verified by price action before making a trade. Now I just need to remember that!

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 junkbondrecycling.com in their entirety. The U.S. Securities and Exchange Commission website has guidance on selecting an investment adviser.

Financial Disclosure:
The author/publisher has no position in corporate high yield bond funds at the time this article was written. This position may change depending on future price action.

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