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Junk Spread Update
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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.
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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.

Cheers,

Mole

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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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