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Junk Spread Update

Junk Spread Update

by The MoleJune 1, 2010

On pain in the ass days like today it’s tough enough to be a trader, let alone a bear. But chances are my updated BAA-TYX spread chart may lighten your mood a little:

[amprotect=nonmember] Updated BAA-TYX spread chart and more below for anyone donning a secret decoder ring. The rest of you guys will have to wait until tomorrow – sorry. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
[/amprotect] [amprotect=1,9,5,2]

I find this extremely interesting. Despite a pretty rapid snap back from last week’s lows BAA yields continued to rise until Thursday (I don’t have Friday’s reading yet) – thus leading to a continued widening of the spread. Bulls and bears alike should take note – in the past a widening of this yield spread preceded considerable down moves in equities.

I think days like today make my case for focusing on the long term. On an intra-day or daily basis I personally I don’t see any type of odds here I want to touch with a ten foot pole. I recommend you just sit and wait things out – I believe I have offered salient resistance/support lines yesterday and until we touch either side there’s really not much to do but perhaps trade the swings a little. Mr. Zero is getting tired today – there is no conviction either side. We are too low for distribution, so either this is real weakness (very surprising) or the boyz are simply taking everyone for a ride.

Not much else to offer today, except this:

Equities continue to trace the EUR/JPY down the the smallest wiggle. The stochastic indicates that the bears have shot their load without any meaningful downside progress. Chances for an EOD ramp are increasing.




About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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