Guest Post: Time To Cut High Yield Exposure - Again

Tyler Durden's picture

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I am a Man I am Forty's picture

off topic, surprised no one has mentioned the fact brazil and india's yield curves are now inverted

qussl3's picture

Werent you listening?

The BRICs are invincible, bulletproof, beyond reproach even.

Get with the program man.

LawsofPhysics's picture

Ha ha.  Yep, and America will look just like them soon enough.

T-roll's picture

I read an article on that topic somewhere last week. Global depression dead ahead!

Dan The Man's picture

 

yah...but what does it all mean ?!?!?

chartcruzer's picture

hard to say.   this article feels a bit premature.   hi yield has had a bit of a sell off, is on a PSAR sell, and has a nice rounded top building but there's no serious sell off in what is a long term up trend.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s232907077]&disp=P

other bonds like international corporate are ok

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s232081816]&disp=P

investment grade corp are OK

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s233943224]&disp=P

US treasuries (10yr) are still solid.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s234728341]&disp=P

lots of folks like to pick tops and this may be a top as QE2 winds down and interest rates start to rise.   Id rather wait for some kind of confirmation from the market itself.

of course,,,  in the end,,, in the long term,,   this interest rate manipulation by the FED and Planet Washington is rediculous, unsustainable, and an insult to we on mainstreet.   but that is another subject.

 

Highrev's picture

As per the indicators on those charts there are some mighty bearish divergences building:

  • 9 month's worth of Class A divergences on the PHB.
  • 2 month's worth of Class B divergences on the PICB.
  • 1-2 year's worth Class A divergences on the LQD depending on the indicator.
  • 1 month short term of Class A divergences on the IEF with longer term (1 year) Class A divergences on the PPO.
chartcruzer's picture

spot on.   let's see if the divergences play out....

LawsofPhysics's picture

Not a bad plan, might be some reward (losing less?) for staying ahead of the oncoming onslaught of financial repression.

Fox Moulder's picture

Hmmm, there was a Yahoo Finance front page article this morning saying it was time to add junk bonds. (It's off the front page now and I am too lazy to look for it.)

TooBearish's picture

And go into what , 2yr notes at .35%?

oogs66's picture

for what its worth, you would have saved over 1/2% or more than one month's worth of interest on hyg.

Mec-sick-o's picture

I agree with illiquidity and deflation/inflation reduction until QE3.

More shocks into the productive sectors with price dislocation.

High interest rates and excessive debt (non-recognized losses) are still sucking up all liquidity.

Missiondweller's picture

I cut high yield after 2009 after a 50% gain. I mean holy crap, take your gains and move on...into cash or gold.