4/18/20 WEEKEND Update: HY CREDIT & BANKS

High Yield and Banks summarized below.

HYG: Chart with Detailed Levels

Market Structure: Still overall Bearish

Momentum: Neutral (unconfirmed bearish x-over)

Internals: Above the Zero Line but falling

Block Volume: Big Chaser Green Bars

GEX: Heavy Negative

HYG Summary: Price is struggling to clear the distribution box. The Fed really is the buyer here of everything in the HY ETF spectrum at the moment and are very much trying to get price above the MSL. If that can take place, you would see a change in the overall risk-on structure of the market. The problem is that the same level that is right above the MSL has been resistance for HYG for YEARS now. So all things being equal, should this break through that it would be extremely bullish. Just very hard to picture that here...but never say never. The big FVG below needs to be filled at some point. Will be interesting to see this play out.

JNK: Chart with Detailed Levels

Market Structure: Still overall Bearish

Momentum: Neutral (unconfirmed bearish x-over)

Internals: Positive and Advancing

Block Volume: Big Chaser Green Bars

GEX: Negative


JNK Summary: Distribution zone is acting as solid resistance for now. The blue line shown above has been resistance on/off for 9 years. It is hard to see JNK punching through that and the MSL here. These are stability levels no doubt, but they are very heavy overhangs that have been over the high yield market for almost a decade.

BKLN: Chart with Detailed Levels

Market Structure: Still overall Bearish

Momentum: Neutral (unconfirmed bearish x-over)

Internals: Positive and appear to be peaking

Block Volume: Neutral

GEX: Heavy Negative


BKLN Summary: The junk of the junk is still stuck below that significant level of 22. It was stuck between 22 and 23 for more than a year prior to the sell off. This is really important here to the overall risk-on of the markets. If junky junk gets over and through the 23 level, that is notable and could imply inflation is coming - not because of the underlying itself, but because if risk on IS to come in hot AND the economic supply/demand structure improves, then we will get serious asset inflation because of the excess liquidity that has entered the market under the premise of fighting a deflation that would have been, based on this outcome 'dodged' to an extent. This is a bell-weather now. MONITOR.

XLF: Chart with Detailed Levels

Market Structure: Still overall Very Bearish

Momentum: Bearish

Internals: Above the Zero Line (positive)

Block Volume: Positive

GEX: Heavy Negative


XLF Summary: This has a very bearish structure and even though the GEX improved, it seems to be all related to a (singular strike) area. There is resistance all the way up to $28.50-$30 which is 30% higher. Until there is more clarity into the quantity of defaults that are going to occur on the books of these banks (or not), I assume price can oscillate around in the distribution area (or right above) until there is a firm assessment of that loan risk. Once that risk is known and being prepared for (or discounted out) - then we will see a firm price move (sharp up if discounted out and sharp drop if worse than expected).


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