Here’s an updated look at HYG…<\/p>\n
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The first thing you’ll notice about this chart is that as HYG has been moving higher over the past two months, the MACD<\/a> momentum indicator has been moving lower. This sort of negative divergence is often an early warning sign of a potential reversal.<\/p>\n Now, over the past week, HYG appears to be breaking down from a bearish rising wedge pattern. If this decline accelerates, then HYG could pull back towards its 50-day moving average (MA)<\/a> line at about $85.66.<\/p>\n Now, let’s take a look at a chart of the S&P 500…<\/p>\n This chart shows a similar bearish rising wedge pattern with negative divergence on the MACD momentum indicator. A breakdown from the wedge could lead to a test of the 50-day MA at about 2832. That’s a drop of nearly 100 points in the S&P 500.<\/p>\n Longtime readers will recall that HYG tends to lead the broad stock market by anywhere from a few days to a couple of weeks. So, this week’s decline in HYG is notable. If HYG continues to press lower next week, then the odds favor the S&P 500 breaking down from its wedge pattern as well.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n Which sectors do you pay most attention to? Have you been following the action in HYG?<\/p>\n![\"\"](\"https:\/\/jc-stable.s3.amazonaws.com\/ee-assets\/channels\/articles\/mm\/201904-mm\/20190426-MM-02.png\")
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