Another Warning Shot From the Junk Market

We might see more weakness here. [Jeff Clark's Market Minute]( Another Warning Shot From the Junk Market By Jeff Clark, editor, Market Minute The stock market has farther to fall… At least, that’s what the action in junk bonds is telling us. High-yield bonds have been falling lately. And, as we’ve pointed out many times, high-yield bonds tend to lead the stock market by anywhere from two days to two weeks. So, continued weakness in junk should lead to more weakness in stocks… Recommended Link [1,000X Bigger than Crypto? ($25 Gets You In)]( [ad_img]( LIVE ON CAMERA: The man who called #1 tech stocks of 2016, 2018, 2019 & 2020 based on return… Reveals the details of a new tech set to grow: - 113X bigger than the Internet… - 600X bigger than 5G… - 2,000X BIGGER than Bitcoin “This is the biggest investing moment in 400 years – and just $25 gets you in.” Brown believes the rollout could be days away… [Watch Jeff’s presentation HERE before it’s too late.]( -- Take a look at this chart of the iShares iBoxx High Yield Corporate Bond ETF (HYG)… [(Click here to expand image)]( The last time we looked at this chart was [back in August]( when I pointed out that HYG had fired a “warning shot.” HYG had broken below its 50-day [moving average]( (MA – blue line). And, the previous two times that had happened, the stock market pulled back soon afterwards (blue arrows). Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. In August, however, HYG quickly recovered. It popped back above its 50-day MA. And, that action helped prevent a more significant correction in the stock market. Now, junk bonds have been falling for most of the past month – and the stock market has been falling right along with them. But, unlike in August, we’re not yet seeing any signs of strength in HYG. Let’s take another look… [(Click here to expand image)]( The chart shows a series of lower highs and lower lows. [Are you ready for Congress’ “Wealth Transfer Act”?]( And, HYG just recently broke below its 50-day MA. This is a [bearish]( setup... Unless HYG can recover immediately and climb back above its 50-day MA, it looks like it’s headed for lower levels. And, if junk bonds are headed lower, then the stock market is headed lower too. Traders shouldn’t be too anxious to buy the dip right here. It still looks like we’ll have a better opportunity to put money to work in the weeks ahead. Best regards and good trading, [signature] Jeff Clark P.S. I’m curious, have you made any significant gains following junk bonds? Will you be taking advantage of the next big dip? Write in to let us know your thoughts – and any questions you may have – at feedback@jeffclarktrader.com. Reader Mailbag In today’s mailbag, subscribers have sent in their thoughts on [Jeff’s recent essay]( about the absurdity of our current times… Tell Jeff I appreciate his satire this morning. He made me smile. "Let's go Brandon." – Bruce Best satire I’ve seen yet! Thanks for the morning entertainment! – Susan Your essay on “Rules Are Rules” is right on target. Absurdity has taken over in D.C. and many other state capitals. One statesman many years ago is attributed to saying the following – “All that is required for evil to triumph is for good people to do nothing.” – Ben Well said. The absurdity of all of it is amazing. The $3.5 trillion bill cost nothing. We shouldn't get together for Christmas, but thousands come across the border – unvaccinated, many with COVID – and are put on buses and shipped all over the country. There ought to be a rule that if you are going to come into the country illegally you must have proof of vaccination. Rules are rules. – Michael Well played, sir. Your essay really struck a chord as most mornings when I turn on the news, I find myself shaking my head in disbelief at the current state of affairs. I'm so glad I no longer have kids in public school and therefore risk being labeled a “domestic terrorist” for the crime of showing up at a school board meeting. – Charlie Thank you, as always, for your thoughtful comments. We look forward to reading them every day. 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