Are high yield rates going to rise?
iShares iBoxx High Yield Corporate Bond (NYSEArca:HYG) – HYG dropped sharply through trendline support Tuesday, from a low volatility upward trend on very high volume – more than 2x above average. This was after hitting the top of a Bearish Wedge formation several days ago.
Price has now moved down from a small bearish wedge inside a larger bearish wedge. Initial target is the bottom trendline now at approximately 83.75. Resistance of the larger wedge was found in the area of the 61.8% Fibonacci retracement level of the larger downtrend started in September 2007.
HYG – Bearish Wedge
SPDR Lehman High Yield Bond (NYSEArca:JNK) – Not quite as bearish as HYG, JNK broke down Tuesday also from a tight upward sloping smaller trend. In the case of JNK it’s been in a larger bearish wedge with the top trend line sloping mildly inwards, and volume was not extreme, barely reaching the 50 day average. The initial target, the bottom of the trend channel is now around 37.
JNK – Bearish Wedge
PowerShares High Yield Corporate Bond (NYSE:PHB) – PHB is still crawling along the top near resistance but given the recent behavior of JNK and HYG it wouldn’t be surprising to see it drop very soon.
PHB – Ready to come down?
