SJB - Adding a 6th Junk Bond Short Position

In early October we added a 5th SJB position and stated that "we are open to adding at least a 6th position once JNK, the junk bonds ETF, trades below $35 or below its up trend."

JNK has closed below $35 and we'll now gladly open a 6th position in its inverse, SJB, since we are that confident junk bonds will tank spectacularly.

We don't suggest SJB will rise spectacularly however, since it is not a levered inverse instrument.  Instead the attraction to us is that this seems as close to a "sure thing" as it ever gets, ergo a great place to put funds as the bear market in general equities unfolds.

SJB last traded at $23.03

Repeating from that post in early October:

"We've been accumulating SJB for two years and believe it shouldn't be much longer before patience is rewarded.
 
Holding such an outsized position is admittedly not totally prudent, however extreme markets arguably call for extreme positions and we will certainly stop out should junk bonds trade back above the well-established down trend shown in red."

Here's an update of that JNK chart:

Here's SJB:



PLEASE READ DISCLAIMER AT BOTTOM OF PAGE