Junk bonds started sending a negative message to stocks last year, as junk bond ETF JNK broke below it’s 30-week moving average last September.
Since falling below this important MA line, JNK has continued to decline, sending a RISK-OFF message to stocks.
A small counter-trend rally took place, where it kissed the underside of its 38% retracement level, as well as the MA line, where a failed breakout took place.
JNK is now within 2% of its June lows, which currently come into play as support. If this support.
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