Wednesday, March 09, 2016

Before the Bell: Treasuries (TLT), Short High Yields (SJB) and the Smell of Fear

I'm beginning to smell a little fear in the market so I check in with my Treasury (TLT) and Inverse Junk (SJB) charts. TLT right now seems to be making a bullish declining wedge with indicators either in the process of turning up or poised to crossover. RSI and Stochastics are already showing signs of life but longer term indicators like the momentum (MACD) indicator still need some time. There's a hint that this week may be the time to be making placements on a downturn in the market next week. A few more days seem to be required to facilitate the transition. Why next week and not this week? The 50 and 100 week moving averages on the $SPX and $RUT are both imminently ready to make a bearish cross-over.
When I noticed this I also became curious about Junk Bonds and realized the chart for Inverse Junk Bonds (or short high yields, SJB) had an overall pattern that looked suspiciously similar to $VIX. SJB is approaching a long term support line with indicators that appear very positive at the moment with an overall trend that is quite positive.