I've been waiting a long time for the the junk bond market to begin showing signs of stress. Of course, as you can see from the chart below, it has been going sideways since a big rebound into 2010. Today we are seeing some of the first real signs of stress in the charts for a year now. The first blue support line broke down recently and now we will see if the longer term red line will hold. I bet not because it looks like the chart is setting itself up for a 3rd wave down. A 3rd wave will be needed to break the red support line.
Chart is setting itself to complete 5 waves down to kiss the line, bounce into wave 2 and then come crashing back down below that support line during wave 3.
Monday, July 21, 2014
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