Chart for Bond ETF HYG Signals Entry Point for Stock Bulls

The setup could be bullish for stocks

by Josh Selway

Published on Jan 30, 2020 at 1:41 PM

We've been gauging the recent pullback in stocks that's come mostly at the hands of the coronavirus outbreak. The Dow Jones Industrial Average (DJI) is pacing for a nearly 200-point drop today, eyeing a second straight weekly loss, but from one perspective this pullback could be an entry point for bulls.

For instance, Schaeffer's Senior Options Strategist Bryan Sapp just pointed out that the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) is trading near a trendline of higher lows that has proven to show when it's a good time to go long stocks. You can see that the 40-week moving average is now moving up alongside this trendline, as well. What's more, the ETF's chart pattern from there gets even more bullish, since Sapp noticed it's formed an ascending triangle pattern.

It's not a direct correlation, but generally an upward move from HYG is good for stocks. Considering that, you can take this as at least one positive sign that stocks could be in store for another push higher in the coming weeks.

hyg chart jan 30x


A Schaeffer's exclusive

11 Stocks to Buy Before Leap Day

Access your FREE insider report before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Why One Investor Is Betting $523,111 on This 1 Stock
This small, California-based company is pioneering breakthrough technology that is enabling companies to move vast quantities of data over the Internet at lightning speeds.
Sudden C-Suite Shuffle Weighs on Disney Stock
DIS is trading at its lowest point since April
Papa John's Stock Pivots Lower After Guidance Cut
The pizza maker's earnings and revenue topped forecasts, though
Why One Investor Is Betting $523,111 on This 1 Stock
This small, California-based company is pioneering breakthrough technology that is enabling companies to move vast quantities of data over the Internet at lightning speeds.