Don't touch my JNK!! Junk bonds break into wave 3 down.

I've been watching the topping of the junk bond fund (ticker JNK) for some months now and have made posts about it in the past.  The reason it is important is because it is a watch point for Prechter who promises that it will go worthless in the coming carnage of defaults.  They don't call them  "junk" for nothing.  They have no value unless the government is artificially stimulating them and the fed is trying to sneak out the back door of stimulus.  The fear is that the fed will make a miscalculation.  It will try to withdraw its Keynesian hand from the market but it does not know which Lehman or Bear Stearns type leveraged scam will collapse this time.  But you can bet that there are plenty of them out there, all leveraged to the hilt dancing as long as the Keynesian Klowns are willing to leave the punch bowl out with the music blaring.

 Here is the last one where I warned people that a topping process was taking place in JNK.  The chart extended a bit since then without breaking down but it did nothing to change my views that a breakdown is coming and soon.  In fact, after the extension there was indeed a breakdown of the ending diagonal followed by a failed backtest of support-turned-resistance.  That backtest then broke down into what I believe was wave 1 of a new bear market.  Wave 2 now looks to have played out as a sideways triangle.  If this view is correct, a big 3rd wave down is right ahead.  There is a case to be made for it to be a C wave of some larger triangle as well but if that turns out to be the case then it can be discussed as the chart begins to point the new formation out.  For now, the save thing to do is to treat it like the toxic waste that it is because 3rd wave or C wave have the same strength.

Here's a close up since the break down.  There are 5 waves down leading to the end of the first wave.  Then a 5 rail bump horizontal triangle.  That tiny little break below the lower support line is the finger in the dam that just came out.  Now the flood waters will likely increase as the hole gets bigger with the exiting water.

A break back above this triangle will completely reset my thinking.  That make this a wonderful short sell because the trigger for covering would only leave the gambler with a small loss.  That means they can leverage up and make this sleepy little mover into an asymmetric gamble: small  potential downside, large potential upside.