High Yield Debt ETF (HYG)

87.25

We have written several times in the last few months about the following
concept: There will be no appreciable decline in the stock market until
corporate debt falls. So far, the HYG remains above key support at 87.25.
However, we must take note of the rather sharp RSI Divergence into the recent
peak. Such a signal is not necessarily a sign of an impending crash, but it’s
something that should get the attention of HYG bulls. A break below 87.25
would look very bearish…

Andy’s Technical Commentary__________________________________________________________________________________________________

 5

3 1150
S&P 500 (180 min.)

1
1130
1129 4?
“a”
1113
2

“b”

That was the third try in the last few weeks to break below 1130 with yesterday’s low of 1129.25.
The price action on this proposed wave-4 looks like a “mini” version of the “b” wave price action in
that sense that we’re getting volatile snapbacks within a well defined range. The math is pretty easy
for the bears: If the recent drop from 11501129 was only the beginning of bigger decline, then the
1143 (62% retrace) should not be bettered. It still looks there is a little ways to go higher in stocks,
but just in case I’m wrong, I have a “sell stop” for my own mother at 1,112, to initiate a short position
that would eliminate her long exposure to this market.
(X)

Andy’s Technical Commentary__________________________________________________________________________________________________

 S&P 500 (90 minute) 5

3
Reprinted from 1/20/2010

1
1130
4?

“a”
1113
2

“b”

This market could not take out key support at 1,130. Instead it ricocheted higher from key support.
Until this market can decisively take out 1,130, we’ll have to assume higher prices. This is getting
very difficult because we continue to deal with very “odd shapes.” The waves 1&3 are “corrective”
patterns, thus the continued belief in some sort of “terminal/diagonal” conclusion. The issue for the
bears is that waves 1&3 were very similar in size, so an extended wave-5 is a distinct possibility. I’ll
readily admit, though, that all of the price action is puzzling. If you’ve been a bear, the best strategy
has clearly been to “wait” for a true reversal pattern, something we haven’t seen in several months.
How can you be bearish when we can’t even take out a previous low?
(X)

Andy’s Technical Commentary__________________________________________________________________________________________________

 Dollar Index (120 minute) (5)?

(3)
Very impressive move in the DXY. The x (or b) wave clearly [5]?
ended in the 76.5077.00 zone. It’s hard for me to see a
a or w “micro” fourth wave on this chart, which makes me think we
-c- probably have some sideways/lower congestion coming soon.
(5) However, higher levels look a highly probability in the near term.
[3]
78.45

(4)
[4]
78.19
[1]

[2]
(1) This looks like an important
level of support now.
-a-
(2)

-b-

x or b

Andy’s Technical Commentary__________________________________________________________________________________________________

 a or w Dollar Index (60 minute)
-c-
(5)
78.45
Yesterday it was suggested that 78.14 was a more likely target given the pace of the bounce. The DXY
is already “knocking on that door.” I can see a case where the Dollar gets some short term resistance
today into this zone.
-b- (c)
-d-
[5]?

[3]?

[4]
[1]

(a)
[2]

-a-

-c-

(b)

Reprinted from 1/20/2010

76.67
-e-
x

Andy’s Technical Commentary__________________________________________________________________________________________________

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