{"id":20537,"date":"2023-01-31T07:30:06","date_gmt":"2023-01-31T12:30:06","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20537"},"modified":"2023-01-31T07:30:06","modified_gmt":"2023-01-31T12:30:06","slug":"a-leading-indicator-shows-this-market-is-on-shaky-ground","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/a-leading-indicator-shows-this-market-is-on-shaky-ground\/","title":{"rendered":"A Leading Indicator Shows This Market Is on Shaky Ground"},"content":{"rendered":"

Jeff’s Note:<\/strong> There’s a major change coming to the market in 2023… and Wall Street has never been more wrong about what to do with your money.<\/p>\n

Last year, the public lost $9 trillion in the stock market… and today little has changed. Stocks and bonds are still turbulent, and cryptocurrencies are doing nothing. If you’re like most investors right now, you’re likely desperate to find a way to consistently pull in profits…<\/p>\n

That’s why for the first time, I’m revealing a breakthrough-strategy<\/a> that’s allowed a group of beta testers to quietly collect gains of $2,339, $1,694, and $3,560 in as little as one day – in today’s volatile market.<\/p>\n

On Thursday, February 9 at 8 p.m. ET I’m sharing the full results of this beta test – as well as our next live trade recommendation for free. To see how you can add your name next to mine on this private trade list, click right here<\/a>.<\/p>\n

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High-yield bonds, also known as “junk bonds,” are flashing another warning sign…<\/p>\n

Junk bonds help to gauge investors’ appetites for risk. When junk is rallying, it’s a “risk-on” environment – and stocks tend to do well.<\/p>\n

But when junk bonds are falling in price, investors are reducing their risks. And in this sort of “risk-off” environment, stocks tend to fall.<\/p>\n

The good thing for traders is that the action in junk bonds tends to precede the action in the stock market by anywhere from a few days to a couple of weeks.<\/p>\n

So, traders can use the action in junk bonds as an indicator of the future direction of stocks.<\/p>\n

And right now, junk is looking lower. Look at this chart of the iShares iBoxx High Yield Corporate Bond ETF (HYG)…<\/p>\n

\"Chart\"<\/div>\n

HYG has put on a good rally since the end of December.<\/p>\n

But recently, that rally stalled. And HYG closed Friday below its 9-day exponential moving average (EMA – red line).<\/p>\n\n\n\n
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Free Trading Resources<\/strong><\/p>\n

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 \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Similar action in December and last August marked the start of short-term decline phases that pushed HYG lower over the next few weeks.<\/p>\n

Here’s how the S&P 500 behaved during those selloffs in the junk bond market…<\/p>\n

\"Chart\"<\/div>\n

In the previous cases, the S&P 500 followed the junk bond market lower.<\/p>\n

In December, the index dropped nearly 300 points in just two weeks. In August, we got a 300-point drop in two weeks – followed by another 300-point decline over the following month.<\/p>\n

HYG peaked about two weeks ago. Yet the broad stock market has managed to push higher.<\/p>\n

However, since high-yield bonds tend to lead stocks, the recent rally in the S&P 500 is on shaky ground.<\/p>\n

Unless HYG can turn around and immediately rally back above its 9-day EMA, it’s likely headed lower to at least test its 50-day MA (blue line) as support.<\/p>\n

If that happens, then the stock market is likely headed lower as well.<\/p>\n

Best regards and good trading,<\/p>\n\n\n
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Jeff Clark<\/p>\n

<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

Are you looking for other ways to invest your money in besides stocks and bonds?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

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