Junk bond ETFs have been extremely popular this year as fixed-income investors take on more risk in an effort to juice yields.
High-yield bond ETFs are a decent leading indicator for the U.S. stock market and many technical analysts keep a close eye on the sector to gauge risk appetites and the health of credit markets.
Now, the iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) and SPDR Barclays High Yield Bond (NYSEArca: JNK) are both trying to break out to their highest level since the 2008 financial crisis. [High-Yield Bond ETF Implied Volatility Skyrockets]
The stock rally during the past two weeks has lifted HYG back to its September and October highs, triggering talk of a so-called triple top for the high-yield ETF, says technical analyst Andrew Thrasher.
He says the junk bond fund is showing signs of “exhaustion” as it tries to break out, according to momentum indicators.
“Each attempt to make a new high appears to be accompanied by fewer and fewer buyers,” Thrasher wrote at his blog.