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I am an independent investor writing at Scott's Investments (http://www.scottsinvestments.com). My site is dedicated to discussing and publicly tracking historically successful investments strategies and sharing free investment resources. I emphasize empirical, historical, and quantitative... More
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  • HYG: Still a Short 0 comments
    Jul 8, 2009 12:04 AM | about stocks: HYG

    As I commented on yesterday, David Rosenberg is gearing up for a market pullback (in progress) and retest of lower market points. He proposed that the sectors that did best since the runup from March will most likely suffer the most in this pullback. One ETF that has been on fire since March 6th is the high yield bond ETF, HYG.


    Look below at how critical Monday and Tuesday was for HYG and how important Wednesday could be for HYG. Both the 50 Day EMA and 50 Day SMA were pierced this week. HYG closed at $75.57 Tuesday - a dime below the 200 day EMA at $75.67. Unless it can get its head above these averages, they could serve as additional levels of resistance and make the case for an investor to short HYG.





     

     

    I have drawn some additional potential levels of support using Fibonnaci retracement. The 50% retracement at $70.62 lines up well with the support line on the third chart at $71 and could serve as a first likely target area for a short position. In addition, what had been supporting trendlines from March have been levels of resistance in both late May and late June, indicating a downtrend:

     





    $80 appears to be a key level of resistance and could serve as a stop price on any short position. Watch potential key levels of support at approximately $73.80, $71, and, if things get ugly again for the longs, $61.50. The inability of the stock to break below each level would indicate it is time to close the short.
     

     

    No current position

    Themes: David Rosenberg Stocks: HYG
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