Can the Market Bounce if Junk Bonds Sell off?

November 23, 2021

Mish's Daily

By Mish Schneider


blank

Written by Forrest Crist-Ruiz

The small-cap Index Russell 2000 (IWM) looks hopeful for a Wednesday bounce while the High Yield Corporate Debt ETF (JNK) sends another warning sign.

Though we are watching all major indices, IWM is the most interesting since it found intraday support near its 50-Day moving average at $228.06.

It should be noted that none of the other major indices are as close to a major moving average as IWM.

On the other hand, High Yield Corporate Debt (JNK) has recently broken main support at $108.06.

This shows that investors’ appetite for risk has waned as JNK tends to move higher in a bullish environment.

Therefore, if IWM is going to turn around we should also watch for JNK to do the same.

Nonetheless, if IWM pushes higher while JNK continues to break down, a bounce could be short-lived.

However, with a potential bounce setting up, let’s look at the strongest members of Mish’s Economic Modern Family for trade ideas.

Currently, Transportation (IYT) and the Regional Banking sector (KRE) are the top performers of this week.

blank

As seen in the above charts, KRE along with IYT was able to close over the prior days’ low showing extra strength compared to IWM which closed almost flat on the day at -0.26%

With that said, for Wednesday, watch for KRE to clear resistance at $75.59 and for IYT to stay over its 10-DMA at $275.83.

These will be pivotal levels for each to clear or stay over.

One last sector to watch is Retail (XRT).

If transportation can head higher, watch for XRT to follow as both at times can trend together.

+++++++++++++++++++++++++++++++++++++++++++++++

Follow Mish on Twitter @marketminute for stock picks and more!

Follow Mish on Instagram (mishschneider) for daily morning videos!

Watch Mish dive into the energy and oil sector on Bloomberg!


blank
Get your copy of "Plant Your Money Tree: A Guide to Growing Your Wealth"
and a special bonus here


ETF Summary

S&P 500 (SPY) 464.45 new support to hold.

Russell 2000 (IWM) 228.06 support the 50-DMA.

Dow (DIA) Watching 355.34 to hold.

Nasdaq (QQQ) Was able to close over the 10-DMA at 396.70, however, has better support from todays low at 392.92.

KRE (Regional Banks) 75.59 resistance.

SMH (Semiconductors) Watching to hold over the 10-DMA at 303.52.

IYT (Transportation) 270.89 support.

IBB (Biotechnology) Needs to hold over 152.41.

XRT (Retail) Watching to hold over the 10-DMA at 102.32.

Junk Bonds (JNK) Watching to find support.

SLV (Silver) 21.79 the 50-DMA.

USO (US Oil Fund) Looking for a rally back to highs.

TLT (iShares 20+ Year Treasuries) 144.46 support area.

DBA (Agriculture) 19.92 the 10-DMA minor support

Improve Your Returns With 'Mish's Daily'

Michele'Mish' Schneider

Every day you'll be prepared to trade with:

  • Unique insight into the health and future trends in markets
  • Key trading levels for major ETFs
  • The 'Modern Family' advantage
  • Actionable trading ideas in stocks and ETFs across all asset classes
Subscribe Now!

Leave a Comment or Reply

Your email address will not be published. Required fields are marked *