4/12/20 Weekend Update: HY CREDIT & BANKS

High yield was the talk of the town Thursday as FED pulled out a bazooka and merged with the US Treasury. M&A Gov style...should definitely be a good thing in the long run (sarc).


**You will notice that I omitted BKLN and LQD today. I am leaving them out until Monday after I can connect w/ Cboe - think there was some errors in their data Thursday). Also considering adding some of the Dividend ETFs to this as well as they are all becoming junk too...more to follow on that.

HYG: Chart with Detailed Levels

Market Structure: Still overall Bearish

Momentum: Bullish

Internals: Positive

Block Volume: Positive

GEX: Negative

HYG Summary: Major move on Thursday as would be expected in that case. Long term I don't think anyone can understand what the FEDs moves mean. The GEX figure is baffling...dealers didn't care. Still major overhead resistance at the market structure level and still bearish. Debt is a total disaster with COVID-19 issues for SMB, Energy, and HY. June is now being the 'restart' target in most states. I think people are unloading this rather than creating new positions and this was a mission to help offload this trash to the FED versus Banks/Dealers holding it. I could be wrong...time will tell.

JNK: Chart with Detailed Levels

Market Structure: Still overall Bearish

Momentum: Bullish

Internals: Positive

Block Volume: MAJOR Positive (appears to be chasers)

GEX: Negative


JNK Summary: Literally no different than my summary for HYG. Definitely can go higher, with the internals still positive but that FVG from Thursday will have to be filled at some point. This is a really ugly chart structure and market structure now...reeks of intervention and is really unhealthy. Will nature run its course here? Have to monitor the next week or two.

XLF: Chart with Detailed Levels

Market Structure: Still overall Very Bearish

Momentum: Bullish (room to go higher)

Internals: Neutral

Block Volume: Negative

GEX: Negative


XLF Summary: Banks are still WAYYY under their Market Structure Level and still quite bearish. They have 3 upside FVGs where they can find resistance. I have some thoughts I will share in my macro view that I think things at the banks are really far worse than we are being lead to believe under the surface with their loan books and the implications to their reserves. Ultimately I believe that we are seeing a liquidity bounce here that is not done yet but in due time we will face the real issue - defaults. They are inevitable now and have yet to be assessed or handled. I think that is why the GEX for this grouping is so negative and may remain that way.


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