The ABCD’s of the Muni Market

• Posted by Greg Harmon
• on March 6th, 2015

Municipal Bonds have had a very good run since June 2013. But with the pullback and sideways action in 2015 is that run over? I shared some thoughts from a longer perspective here last month but it involved looking at longer term monthly price action. Where the longer term is good at giving a clearer picture, it can often miss the turning points. For this the intermediate chart can give more granularity.

The chart above of weekly price action of the Municipal Bond ETF ($MUB) does give more granularity. But it comes up with nearly the same conclusion. The chart shows a AB=CD pattern in the weekly price action. A rise followed by sideways and a fall only to start higher again. And this AB=CD pattern targets a move to 118.25. The monthly charts looked for 117 so pretty close. The recent action is a bit concerning and a move under 109.25 might derail this but until then the future for Muni’s looks bright.

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