Ill-LQD

Courtesy of our lovely Keirsten I got a nice little gem for you rats – which nicely visualizes the irrational exuberance that has gripped the investing public since early March;

From a sheer trading perspetive all I can say is – WOW – talk about a clean trend – doesn’t get much sweeter than this. But what is this ETF all about? Let’s consult with Google Finance:

Shares iBoxx $ Investment Grade Corporate Bond Fund (the Fund) seeks investment results that correspond generally to the price and yield performance of a segment of the United States investment-grade corporate bond market as defined by the iBoxx $ Liquid Investment Grade Index (the Index). The Index measures the performance of a fixed number of highly liquid investment-grade corporate bonds. The Index is a rules-based index consisting of up to 100 highly liquid, investment-grade, United States dollar-denominated corporate bonds that seek to maximize liquidity while maintaining representation of the corporate bond market. The Fund invests in a representative sample of the securities included in the Index that collectively has an investment profile similar to the Index. The Fund’s investment advisor is Barclays Global Fund Advisors.

There you have it – investment grade corporate bonds. This in the face of rising unemployment and rising default rates in residential mortgages, commercial loans, and yes even corporate bonds. Debt is trying to make a comeback and a prominent sign is the record $1.8 trillion in global corporate bond issuance in the first half of 2009, which exceeds the old record of $1.74 trillion, which was raised in the first half of 2007, right before the credit bubble burst in July of that year [source August 09 Elliott Wave Financial Forecast].

Now looking at this chart I also see something else – unwavering optimism. And if you are looking for confirmation when Primary {2} will finally be over then look no further than that trendline I plastered on this chart (and which my two cats could trade). Once this trendline is being breached – that’ll be when Primary {3} will be in session – until then the whipsaws, the fake outs, the head fakes, and the manipulations will continue unfettered.

Quick look at the wave count. We’ve been riding the 75% line of that large channel since yesterday now. Two ways to interpret that from an EWT perspective. Either it’s a (i)-(ii) and we’re pushing upwards into (3) – or it’s a (i)-(ii) and we’re pushing downwards into (iii) – don’t you love that? LOL 🙂

The good news is – we should know fairly soon as we’ve worn out our welcome – time for the tape to show its cards and decide on a direction: Soylent Orange or Blue.