Charts and technical analysis provided for LQD, MUB, JNK and HYG.
LQD Weekly Chart: Corporate bond weekly chart shows a rising blue wedge with negative divergence across the RSI, MACD and stochastics, so a spank down is in order. Note, however, the green lines, especially money flow, with a long and strong profile, thus, price will need to come back up after a short sell off. Nonetheless this is topping action ongoing. A move back up to 118 would be on the table. A price close above 118 would be somewhat of a game changer since LQD will want to venture to 120 should that occur.
Projection is that price is topping in this area, reassess chart at 118 a couple weeks or so from now. Chances are that all indicators will show negative divergence when price comes back up signaling the top. The bag-holders are entering LQD now, so think long and hard about any long LQD positions. Price will probably provide a chance to jump ship when it comes back up, but considering the strong run upwards, again fueled by easy money starting in November-December, traders should take the money and run for it. If you sit it out a bit longer, do not overlook a gift where price comes back up to give you a second chance to exit.
LQD Daily Chart: LQD daily chart shows how price was fighting the 20 and 50-day MA's in November-December, deciding to roll over, when the easy money printing presses started dropping money from helicopters. Note the island formed now above 115 since price gapped up from 114 to 115. Thus, an island reversal pattern may be on tap on the way down where price collapses back down thru the same gap. At any rate, the 114-115 gap is juicy and will require filling at some ponit forward.
The blue lines and rising wedge create the negative divergence smack down, price dribbled off the top. Note the money flow green line, thus, price is performing a little stutter step higher to satisfy the money flow, but, in quick order, she should roll over and test the 20-day MA for starters in the days ahead.
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