The Relationship between My Junk, SPYing and the Treasury
- Posted by Greg Harmon
- on September 29th, 2011
Many traders and analysts use the triangular relationship between the SPDR Lehman High Yield Bond ETF, $JNK, the iShares Barclays 20+ Year Treasury Bond Fund, $TLT, and the S&P 50 SPDRs, $SPY, to gauge where equity markets may head. The view is that as $TLT rises $SPY and $JNK fall, or as $JNK falls the $SPY will follow and $TLT rise. Any one could be the catalyst with impact on the others. These moves do not always happen at the same time though and may lead to signs of a false move or an opportunity to trade the laggard. Below are the charts for each on a 30 minute time frame for the last 10 days. Notice how the $JNK and $SPY exhibit the same
Price pattern, gapping lower September 22nd with a slight rise through to the 27th and then a move lower from the 27th through the 28th. The $SPY gapped higher on the 27th and lagged the move lower but they moved very much in tandem. The $TLT did the inverse, gapping higher the 22nd. Since the 23rd it has been falling with the $SPY and $JNK slightly rising and then stable the 27th. But then Wednesday the 28th, it went no where while the $JNK and $SPY sold off big. With the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators for $SPY and $JNK suggesting more downside on this time frame and those same indicators supporting an upside for $TLT, it seems this is may be an opportunity to get long the $TLT, at least for a short term trade if this continues.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
Dragonfly Capital Updates
- Macro Week in Review/Preview May 24, 2013
- A or B You Decide – It Matters….Maybe
- Premium Earnings 5-24-13
- Lessons From Japan
- Drew’s Tips – Hollow Red Candle
- A Lead for an Earnings Trade in Salesforce.com
- Premium Earnings 5-23-13
- Could Be A Good Spot For a Pullback
- Don’t Forget the Euro, It Gets Jealous!
- Premium Earnings 5-22-13