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My hero and mentor Sir John Marks Templeton used to say…The four most dangerous words in investing are-“Its Different This Time!”
Basic Materials ETF (IYM) and High Yield ETF (JNK) have created a series of lower highs since the 500 hit its highs last April, along line (1) and have both broken support of late.
In the past weakness in these sectors was reflecting some underlying weakness in the broad markets! Will it be different this time around? I humbly don’t know!
What we do know is this….investing is an art, not a science. I do believe the action of these two are key signs for what could be going on behind the scenes and their price action should be respected! Keep a close eye on these two to see if they continue to experience relative weakness.
Richard…
Awesome and correct comments on your part, in that my charts DO NOT include dividends.
I do this on purpose.
I don’t want true price distorted by dividends. If JNK is truely heading south I want to know, I don’t want NAV weakness to be impacted by re-invested dividends. I do this so the chart reflects price only.
Great eyes and comments and Thanks for your viewership of the blog,
Chris
Aaron….
My “Shoe Box” indicators, which are based upon different credit indicators, are not reflecting weakness or concerns at this time.
Chirs
There could be a significant problem with your charts on ETFs. They look to me wrong in that they do not consider dividends. If you consider dividends paid, the shape of the chart is significantly different. It is the same way to look at stocks: a dividend gap can result in the wrong analysis and wrong conclusions. JNK, divi adjusted, is just pulling back from all time highs. Best regards. Riccardo
Hi Chris,
Since no one else has stepped up to the plate to answer your question I will.
The answer is YES!!!!!
Just some late night humor.
How does the shoe-box look like these days?
Aaron