High Profile Municipal Defaults Can’t Sink the Muni ETF

Harrisburg, Pennsylvania defaulting on their debt was a high profile situation. But despite that the Municipal Bond Market, as measured by the iShares S&P National Municipal Bond Fund, $MUB, continues to to trend higher. In fact it looks pretty bullish. Take a look.

The chart above has many bullish features. First the price is trending higher in an ascending triangle. A move above the top rail at 107 would create a price target of 109.50. this is confirmed by the target from a Measured Move (MM) based on the previous move from 102.60 to 107 which has a target of 109.30. Support more upside is the rising Relative Strength Index (RSI). The RSI has actually never turned bearish since breaking the mid line higher in January. The Moving Average Convergence Divergence (MACD) indicator has been running near zero but is also starting to rise, which is bullish. And all of the Simple Moving Averages (SMA) are sloping and trending higher. Look to this to continue higher in the short term regardless of the default rate.

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