December 8, 2023 9:21 am

Reversal In Junk Bonds Would Be Bullish For Stocks

With yields trading at elevated levels and stocks trading at depressed levels, it makes sense that junk bonds are not faring well this year. But they are trying to re-group for a potential rally, and stock bulls would love to see a risk-on junk rally. They have their fingers crossed.

Today’s chart is a weekly chart of the SPDR Bloomberg High Yield Bond ETF (NYSE:).

JNK Weekly Chart

JNK Weekly Chart

As you can see, JNK tested its COVID lows before reversing higher. This bullish reversal has junk bonds attempting to break out of a descending wedge pattern at (1).

Bulls will definitely want to watch this week’s close and look for a follow-through next week. A strong breakout would be a positive message for stocks. Stay tuned

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