Junk bonds break out above multi-year falling channel

Tony

Conclusion: With the S&P working on hitting all-time highs, this push above resistance and long-term moving averages sends an encouraging message to the risk on trade.

http://blog.kimblechartingsolutions.com/2016/07/junk-bonds-breakout-above-multi-year-falling-channel/

Junkster

You can't use traditional technical analysis with junk bond ETFs ala JNK or HYG. In reality, junk bonds hit all time highs on 6/8/16 and then again on 6/23 right before BREXIT. Previous all time high was 5/31/15. They are on a roll now hitting all time highs 6 of the past 7 trading days. Looking at a chart of JNK or HYG is simply not reality.

Edit: I left a comment at the site of your link but seriously doubt it will get published.

AndyJ

Junkster, can you link a chart that shows what you mean? Thanks -- AJ

Junkster

AJ, First chart is reality and what is happening to those who actually trade/invest/own a junk bond fund. Second is not reality because it is only price and dividends are not included. (Click on five year time period if my link only shows one year) You would think looking at the second chart junk bonds are nowhere near all time highs as in the first chart where they have been at all time highs this month. Actually, the accounts of those who have been long term holders of HYG are also at all time highs. But it sure isn't reflected in the charts.

https://fred.stlouisfed.org/series/BAMLHYH0A0HYM2TRIV/


http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=hyg&insttype=&freq=2&show=&time=12

clacy

It depends on the charting service if dividends are included or not, but Junkster is correct that dividends have to be taken into account to evaluate total return, so that chart is way off. In reality JNK is very near all time highs, which is not reflected in the chart posted.

AndyJ

Thanks, J. I thought it might be the difference between price or NAV and total return, and that makes sense. I think the reason you see charts posted like the one in the O.P. is that a lot of the time, the highs and lows somebody wants to compare are the highs and lows of the market values of the securities themselves, and not an investor's account value.

Makes sense to me to know what both are doing, when you're talking bonds or dividend stocks, pretty much anything with regular income distributions.

JoJo26

I'd argue you can use technical analysis with anything you'd like, doesn't matter if it's "just a price chart." TR shouldn't really matter when it comes to technical analysis. Not that I condone using it; that stuff is black magic, IMHO.