Wednesday, August 18, 2010

JNK Watch

The exchange traded fund that tracks high-yield corporate debt (JNK) is showing bull signals, suggesting a resumption of the uptrend that has carried the price up 9.7% from May 21 to July 27. The ensuing correction has been shallow and stayed well above prior lows, meaning the uptrend remains in force.


The bull phase is showing today on Person's Proprietary Signal (pps) and three days ago on the fast stochastic. The parabolic sar and macd remain in bear phase, although the macd for the third trading day is rising toward the zero-line.

JNK is trading below the 20-day simple moving average, and today's rise is coming on lower volume than anytime since early August.

Above all JNK is a dividend play, yielding 9.64% annually (paid monthly) without exposure to foreign exchange risk.

JNK is moved mainly by expectations about corporate default rates. So a rising JNK suggests confidence in the business recovery.

On the Person's chart, JNK is trading midway between the midline and the upper weekly pivot.

Person's Table
ppspps openupper pivotlower pivot
JNK $39.13 $39.08 aug18 $39.31 +0.5% $38.40 -1.9%

JNK has room to move in either direction before encountering severe resistance.

Reversal Levels
  • $39.59, +1.2% (swing high)
  • $39.44, +0.8%
  • $39.18, +0.1% (20-day moving average)
  • $39.13 <== You are here.
  • $38.55, -1.5% (swing low)
Bottom line: I like JNK. I own JNK. It's an OK place to park. cash. Dividend plays like these, I use the 12-month moving average on a monthly chart to determine my exits. JNK is above the moving average, so I hold. Were it to drop below the moving average (now $36.72), then I would exit. Disclaimer
Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.
  • sto zone: green for bull phase, red for bear phase.

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