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Many equity traders and equity technical analysts have been discussing the bullish divergence between the RSI and the recent lows in the equity markets. However, Wall Street professionals know that bond traders are usually more accurate then equity traders.

The chart below for this year is the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEARCA:HYG). You can see that the HYG is trading currently in a bear channel, with lower highs and lower lows for the year.

2012

Click to enlarge

The chart below is HYG through the summer of 2011, with a very similar pattern of lower highs, and lower lows.

2011

Yes, it does seem the equity traders are partially right, with a very short-term rally in equities and high yields. However, if we do not take out that top trend line on HYG, this market will head lower again on more Euro problems.

With Europe's problems being worse this year then last year, why would not the HYG trade lower with Treasuries trading at all-time highs? Well, high yields are highly doubtful with any lasting rally in risk assets.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TLT, VXX, AAPL over the next 72 hours.

Additional disclosure: Long BAC Put Options and Long XHB Put Options

Source: High Yields Are Highly Doubtful