LQD corporate bonds feeling lots of love today, folks seeking this ticker that is made up of some stellar blue chip companies. Many perceive this play as a safe place. Price moving up means yields moving down. This chart, as well as the weekly chart, shows overbot conditions and negative divergences across the board, in other words, the folks that did buy today will probably regret it in the future.
In the near term, the RSI and MACD show a long and strong profile so they want to see another matching or higher price high, hence, the M Top projection shown by the black line. Do not look for LQD to excite much more on the upside, the charts prefer the negative divergence affects coming and price should move sideways to sideways down from here.
For LQD chart use search box above for keystone speculator or view at stockcharts public charts list keystone speculator.
Since early November the picture has changed here considerably...Now the issue is approaching oversold extremes. I appears that this ETF may be more loaded with financials than the market (and I) have a stomach for...Thinking of switching to VCLT which has out performed on a 3 month to one year basis and pays slightly more yield. http://stockcharts.com/h-sc/ui?s=LQD&p=D&b=5&g=0&id=p34888191126
Yep, price rolled over, then came up for matching highs, then fell on its sword. here's an update.
LQD Daily Chart:
A look at corporate bonds shows how price is trying to stay inside the long term channel with all its might. The falling red wedge and positive divergence with RSI, MACD histogram and stochastics helped bounce price off the bottom rail of the channel. Note the 20 MA wanting to cross down thru the 50 MA which is bearish. Price has very much a sideways feel to it and the blue sideways symmetrical triangle highlights this action. Note how price can play out in the 111.3 to 112.0 range as it forms the triangle apex, but price will need to make a decision one way or the other.
Note the purple lines showing the negative divergence that called the top. Projection is for the 20 MA to stab thru the 50 MA, price to fall out of the bottom side of the blue triangle, and for price to collapse thru the lower rail of the channel, all bearish, with a 110.5 initial target. Interestingly, comparing MUB, LQD, HYG and JNK, LQD has held up the best, then MUB, then HYG and JNK have already performed sizable down moves.
LQD Weekly Chart:
LQD weekly chart shows the top identified by the negative divergence blue lines. Price received its initial spank down and is trying to maintain that lower trend line. This price point is also the 20 MA. Note the red lines all showing weaker indicators and price has not even made a low in that same time frame--very bearish. Projection is for price to fail the trend line and the 20 MA and move lower. Initial targets are 110.5, 110.0 and 109.6. The 50 MA is lining out more sideways now which will create support at 108 which gels with the horizontal support at 108. Watch the 50% levels for RSI, stochsatics and money flow, should any of them fail, that will lead to the bearish trouble ahead.
For LQD charts use search box above for keystone speculator.