JNK weekly 6-16-14

JNK daily 6-16-14

Elliott Wave Analysis of Junk Bonds ETF (ticker JNK) by Sid from ElliottWavePredictions.com.  Click on the charts twice to enlarge.

On the weekly chart, after the large 5-wave downward impulse from late 2007 through March 2009, junk bonds recovered (partially) via what appears most likely as a corrective ABC zigzag, culminating at the .707 retracement fib in May 2013.  Notice the tendency of junk bonds to form a significant cycle trough about every two years:  March 2009, October 2011, June 2013.  If this pattern holds, the next 2-year cycle trough will be due about mid-2015.  The expectation of a strong move down into mid-2015 fits nicely with the Elliott Wave count as shown.

On the daily chart, after the contracting diagonal ended on May 8 2013, a strong 5-wave downward impulse ensued through June 24 2013.  That wave was very likely a wave 1, which set the new trend direction in junk bonds as DOWN.  The subsequent upward movement has been choppy, overlapping, and corrective, and counts best as a complete (as of today) WXYXZ triple combination.  Notice that the upward movement from June 2013 through today has also formed a traditional bearish rising wedge.

Hurst cycle analysis is projecting downward movement starting now through mid-July, followed by a partial retracement though mid-August, followed by a strong move to the downside into November.