Mish's Market Minute

Is Junk Worth More than Gold?

Mish Schneider

Mish Schneider

Director of Trading Education, MarketGauge.com

In Santa Fe, New Mexico, we awoke with freezing temperatures and fresh snow.

This week, the state lifted the current lockdown, with restaurants now being able to serve at 25% occupancy outdoors. I can hardly wait to sit outside on a windy winter day!

The blatant disconnect between state orders and restaurants ability to do business outside is comical. Similarly, the market could be showing its own version of disconnect.

In the past, we have looked at High Yield Bonds (JNK) to get a picture of the market's risk appetite. In general, if JNK moves higher, investors are willing to accept more risk. Conversely, gold (GLD) is seen as a less risky play as investors look for safe places to store money throughout high inflationary periods or downward market trends.

Today, GLD confirmed a second day over the 200-day moving average. Its recent gap up from the 166 low proved that investors haven't thrown in their golden towel, even with market highs close by. JNK also performed well, closing just under last week's high of 107.85. If both GLD and JNK continue to move higher, it could be showing that while the market wants to continue to new highs, it's also worried.

Whether it's worried for longer-term inflation, pending geopolitical stress or a renewed market correction is hard to tell. Watching the correlation between the two's performances, especially if they diverge further, could be a great tell for the near term.


  • S&P 500 (SPY): Support 363.12
  • Russell 2000 (IWM): Support 10-DMA at 181.04 with 185.44 resistance
  • Dow (DIA): Resistance 300; 292.20 support
  • Nasdaq (QQQ): 300 new support
  • KRE (Regional Banks): 51.07 resistance; support 47.22
  • SMH (Semiconductors): All-time high close.
  • IYT (Transportation): 225.49 resistance with key support 215
  • IBB (Biotechnology): Doji Day; sitting in support around 145 area
  • XRT (Retail): 61.40 resistance. Support the 10-DMA at 59.57


Mish Schneider

MarketGauge.com

Director of Trading Research and Education

Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More