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The Junk Bond complex can be a great leading indicator for the next major move in the stock market.
Junk Bond ETF’s (JNK & HYG) peaked at the end of February this year, the 500 peaked about a month later, then all three declined around 8% in price.
The rally over the past 90 days brought all three of these assets back to their prior 2012 highs. Since hitting resistance line (1) recently, all three have reflected a small bit of price weakness, while attempting to break a rising support line at (2).
The media has been beating the drum that September will be a down month. It is way too early to tell how the month will turn out. Do keep a close eye on JNK & HYG…. if they continue to reflect weakness, stocks should follow them like they did earlier this year!
