Junk Bonds Have Perked Up Lately

The Short-Term Trend

There isn't much to report. The uptrend continues as shown by the bullish percents which are pointing higher.

(Click on image to enlarge)

I'm feeling cautious while others are gaining confidence, so I am taking partial profits and raising cash into this rally.

Sector Strength

What is this spreadsheet telling us?

The major indexes all have strong scores and skewed right which confirms holding US stocks.

Energy, Consumer, Technology, Miners, Brokers are the leaders. That is a bit of an odd combination, and I am not sure what to make of it.

But I believe in following the market, and these are the areas where I would focus the next time that there is a buying opportunity... and given that these are still the leaders when the buying opportunity occurs.

It is still surprising that the Financials are not leaders in this market. I think it is important, and it indicates that there is an issue we don't understand yet.

Foreign Markets, Precious Metals, Income Stockand bonds continue to be weak, which means I would avoid (although I am keeping an eye on the Precious Metals).

Buying into some of these beaten down areas of the market is so tempting, but I am just not good and the buy-and-wait style of investing.
 

(Click on image to enlarge)

 

Rates

This spreadsheet isn't telling us too much.

Inflation-protected Corporates are showing strength which makes sense since there are signs of inflation. However, the Inflation-protected Treasuries aren't showing much strength which is curious.

Junk bonds have perked up lately while the 20-year-plus Treasuries, TLT, ticked lower which is consistent with willingness to take on a bit more risk.

What is my view? I think we may be in a period where bond and stock prices go up and down together. This is pointing me towards 3-month T-Bills, BIL, where I don't need to worry about the price of bonds.

(Click on image to enlarge)

This chart pattern might be showing a partial retrace of the new downtrend, so be cautious. I don't like stocks anywhere near as much when Junk Bonds are weak.

(Click on image to enlarge)

Here is something from the Investors.com site that I like...

IBD founder William J. O'Neil's book "How to Make Money in Stocks" offers words relevant to this news-driven market: "After it's been repeated several times, both good news and bad news become old news. Old news will often have the opposite effect on the stock market from what it had when the news first broke."  [Investors.com, Jun-8-2018]

Outlook Summary:

The long-term outlook is cautious.  Higher rates are a head wind.
The medium-term trend is up as of May-10. 
The short-term trend is up as of May-7.On watch for the next short-term downtrend.

The medium-term trend for bond prices is down.