HYG likely bottoms after a short-term dip; current weakness is a buying opportunity for upside in Q4.

And I'm going to bring you a special analysis on HYG. That's the high yield corporate bonds.

Let's take a look here as we look at HYG.

And uh I think that uh what I'd like to do is uh first talk about HYG, high yield. Um I'm going to look at multiple time frame analysis in here. I'm going to tell you why it's important.

So, let's uh switch over now to the uh chart of HYG. I'm going to start out with monthly looking at this. And the uh HYG is not one that we uh regularly do Katie that for a monthly analysis is it?

So, this may be important to start looking at because I'm going to show you why.

So, what I'm going to do is I'm going to I'm showing you just the candlestick chart and our uh and our proprietary indicator right over here, the reversal scout. Uh but then what I want you to see is once I bring in the cycle analysis, how incredibly valuable this is.

Let's take a look as we look at the HYG monthly cycle analysis. And this is incredible. When you look at that, you can see that there is an amazing rhythm in here in this cycle analysis.

And HYG and that is this big important dip right over here that went into 2016. Stock market had a big drop over there. This big drop over here into 2009. And this drop over here into 2022. You could see how these follow the markets.

Right now, we're at the point where HYG is likely to bottom.

What is this? Why is this important? It's important because it makes a bullish case for the stock market for the end of this year and maybe into the beginning of next year. This highlights that that it's fairly likely that the bond market is going to continue in this upward trend for the corporates and that uh whatever downside correction is going on right and over here which correlates with the stock market and I'll show you that correlation in a moment that we're very likely to be uh moving to the upside.

And we'll take a look here at the weekly. So this chart that I'm showing you right now is the weekly. And I just want to move this over to the weekly analysis. And look at the crazy good cyclical patterns that we have in here.

Each of those yellow ovals are the corrective phases. And you can see that we've been in there right now on this weekly chart. What is that saying? Well, you could see that this made a trough right over here, right at that point.

That's the important low. It's staying above it right here. This is a bullishly configured cycle if it holds up still. And this points out to the next couple of weeks potentially on the downside.

Now, this is the stock market correlation line right over there. Look at how it follows. In the case of where we're doing right now, the stock market has way outperformed. That's AI.

That's the AI buying that's going on and really helping lift the market right over here.

Now, this looks to me like another couple of weeks and then the market's going to start going up. That correlates with what I'm telling you about the um the stock market that I'm going to show you, the period of risk that we're in.

And we still might get some move to the downside.

Let's look at the daily chart right over here. And this is amazing. Look at the cyclical rhythms that we have in here. Gorgeous. You see that the previous cycle right over here was negatively configured.

This cycle failed in the resistance right over there. I can just grab this uh Fibonacci tool and you could see that got right up here actually to the 78.6 and then failed. That's a a little bit stronger than I would normally give it credit for.

And then uh actually that's sorry that's right over here right okay that got up to about just over close to the 78.6 and then uh it failed and got under this level. So you have this negatively configured cycle that's the down arrow.

This here looks like uh about 2 weeks or so on the downside still. It might stop you know somewhere around here. It could get somewhat lower over here, but this is a negative influence on the stock market because they do track very closely.

And you can see in here the momentum has moved to the downside as the slim ribbon has gone down the uh and is now parallel on the downside. The reversal scout down and this red signal right over here uh on the slim ribbon PO look at when the slim ribbon po was negative here how weak that was.

So, it's just a great tool. And this says another couple of weeks out there when I look at this for potential for HYG to go down. And you know, going back to the monthly over here, it says that once that's over with, it's likely to be going up.

For investors, this has a message to me. and that is that it's fairly likely that if we get some kind of a correction over these next I'm just going to say two to three weeks that uh it's likely a buying opportunity for investors and you're likely to see the market moving back to the upside again.

So that is a a look at the high yields. Very important. And I think overall they're in alignment with what I thought. Weak into the third quarter, more positive into the fourth quarter, and probably into early ' 07 before we get into what I think is a much more bearish period later in 2007.

So that's a look at HY and a more investor look.