Buying SJB to Short Junk Bonds

Market Note: The last time the RSI (Relative Strength Indicator) momentum measure for the DJIA was as high as today was in early April of 1999, after which the market moved sideways for two years then suffered a major 16-month crash.

SJB is the ProShares Short High Yield ETF, and here is its weekly chart:

A close above the green line will signal an opportunity to enjoy the enormous upside potential in shorting "junk" bonds. 

At some point, the long-running bull market in high-yield instruments will end and reverse in spectacular fashion.  This should coincide with a protracted drop in equities, resulting in the proper punishment for the extreme complacency currently exhibited by investors and speculators in stocks and bonds at current levels. 

We're buying SJB, last at $30.92 and utilizing a stop at $30 on a closing basis.


Readers of this blog should not be at all surprised about Friday's crash in gold and silver:

 

 

 

Those who heeded our warnings could've made a killing.


The  articles linked below may serve as contrary indicators, suggesting that after the recent sell-off a bounce is due. 

Cyprus may sell some gold reserves to help fund bailout.
Goldman Sachs Says It's Time to Short Gold
Japanese Rush to Sell Gold

We've covered most of our gold shorts for now (positions often mentioned but not diarized herein) and will remain short silver for the long haul (via ZSL as detailed previously in this blog).  There will be big bounces as gold and silver, and most commodities, go much lower over time. 

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