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Are Junk Bonds Ringing An Alarm?
Global Bond Rout Continues
Utilities, Mortgage REITs, Homebuilders in Caution Phase
Discretionary Stocks Flash Warning Signs. Tesla, Home Depot, Amazon, McDonalds, Lowes, Starbucks and Nike discussed
Short-Term S&P 500 Outlook
Japanese Yen Tests Critical Support
Gold Gives Another Sell Signal
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Amazon, American Express, Boeing, Caterpillar, Disney, Google, Honeywell, Intel, 3M, AT&T, Target, UPS
Beam Therapeutics, Brown Foreman, Hormel, Novavax, Skyworks, Tronox, Sarepta Therapeutics
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​Today we will look at high-yield bonds and try to figure out if they’re already ringing an alarm regarding a stock market top.

The global bond rout continues, and we’re seeing higher and higher interest rates. This is affecting rate-sensitive sectors such as utilities, mortgage REITs, and especially homebuilders. Consumer discretionary is also showing warning signs. We will also look at the short-term S&P 500 outlook on the four-hour chart and then finish up with the Japanese yen. Gold has given yet another sell signal.

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Okay, let’s get started.

First of all, I wanted to show this chart of high-yield bonds. I notice several things about this chart that I’m a little concerned about. Number one is this abrupt drop and the drop below this green support/resistance line.

Again, these are my indicator lines: green, blue, red, and yellow. You can find out more about them by going to the link in the description.

So why do I worry about high-yield bonds? We need to look at the longer-term chart for high-yield bonds, and I will show you that high-yield bonds and stocks are highly correlated with one another.

This is high-yield bonds, and down below we have what’s called the correlation coefficient. This is the correlation coefficient with the S&P 500. By and large, stocks and high-yield bonds do the same thing. This is why I emphasize that it’s important to look at high-yield bonds when we’re trading stocks.

Right now, we’re seeing that high-yield bonds have actually dropped below the green line. On a couple of occasions, yesterday on Friday and the day before on Thursday, they tried to rally but were stopped exactly at that green support/resistance line. That line is currently important.

So when high-yield bonds suddenly decide to take the lead, and in this case to the downside, I start to pay attention.

On the longer-term chart, this is a weekly chart of high-yield bonds. We can see that the indicator lines are now getting closer together. What I’m referring to is this distance. The distance between the yellow and green lines is currently around 3.37, but not so long ago that same distance was significantly higher at 7.8 points, or dollars. This was at the beginning of this year, in February 2026. It’s now September 2026.

So we have a narrowing of the trading range, and many times, but not always, a narrowing of a trading range precedes a change in the direction of the prevailing trend.

For example, right here, we saw a very wide range for junk debt. But then notice how much it narrowed, and then it became very easy for the price to drop below the red support/resistance line. That happened around January 24, 2022, and then we saw a move lower.

Now we’re seeing a similar situation. It’s not identical, obviously. Nothing is identical in the stock market. But we’re seeing a narrowing of this trading range, and now this makes me wonder if we’re headed toward a trend change.

What I’m concerned about right now is this somewhat weaker posture for high-yield bonds and, as I’m going to show you in a second, for bonds in general.

Namely, the 10-year Treasury note yield just hit a three-year high. Let’s look at it on the weekly chart as well. Here it is.

I’m just going to turn off the indicators for a second.

This right here was in October 2023, and the yield back then hit a high of 5%. Yesterday, we hit a high of 4.99%, so I’m fairly certain we will exceed this level. If we hit a 5% yield, even if only for a few seconds, that would mean we’re about to hit a fresh 17-year high for the 10-year Treasury note yield.

As far as the 30-year Treasury bond yield, we have already done that. We’re at 19-year highs.

And this is happening worldwide. We’re seeing higher and higher yields from Japan to Europe to pretty much everybody in between, and the United States is not immune. We’re seeing investors starting to demand higher yields because they perceive greater risk in governments paying back their debts.

The higher the yield climbs, the less appealing certain sectors of the stock market become. One of those sectors is, of course, utilities. Utilities pay significant dividends and are relatively stable, but additionally, they need to borrow money to finance their operations—for example, to build infrastructure. The higher yields climb, the more pressure there is on their profit margins.

We’re seeing this right now in utilities. I highlighted this back on August 21, and now we’re seeing no improvement. In fact, I see even more weakness.

We’re about to enter a bear market for utilities if we close below this yellow line, which is at 41.88 for the utilities fund $XLU. It’s literally about 1.3% away, so we’re very close to an outright bear market for one of the sectors of the S&P 500.

Utilities are not a huge sector. I think they account for only about 3% of the entire market capitalization of the S&P 500. Nevertheless, it is still one of the major sectors, so we need to pay attention. It is indeed an interest-rate-sensitive sector, so utilities are certainly feeling the heat from higher interest rates.

Another sector that is feeling the heat from higher interest rates is mortgage real estate—specifically, mortgage REITs, or mortgage real estate investment trusts. This fund holds mortgage REITs. Obviously, it is also interest-rate-sensitive, and we can see that it has already dropped below the red line, which puts it in a caution phase.

Another sector that is surprisingly weak—and it is not really directly interest-rate-sensitive, but I think it is sensitive to the fact that mortgages are increasing and fewer people can afford housing—is homebuilders.

We saw homebuilders move into a caution phase back in July, which was an early warning sign. And now, on September 10, 2026, we’re seeing homebuilders enter an outright bear market. So I’m avoiding homebuilders at this point.

Again, these are obviously interest-rate-sensitive areas, but they are important for the economy because many people have mortgages and many people own homes.

If they’re trying to sell their house, fewer people can afford to buy it. That means housing prices might come down. We’ve seen that happen before during the housing crisis in 2007–2008, so it’s not impossible.

Right now, I’m in Silicon Valley, and to get a room in a house where you share a bathroom, you need to pay over $1,200 on average—maybe a little more, maybe a little less. That’s just how crazy prices have become here because of Silicon Valley and AI. Some people call it a bubble; maybe it is a technology bubble. Whatever you want to call it, that’s just how prices are here.

So can a reversal happen? Absolutely. We’ve seen prices come down before, including during the pandemic and during previous housing downturns. We could potentially expect something like that again in the future. Higher interest rates put a damper on this type of industry.

Finally, as far as the major sectors, I want to highlight the consumer discretionary sector, $XLY.

The consumer discretionary sector contains stocks such as Amazon and Tesla. And I wanted to humble-brag a little about Tesla. A few weeks ago, on July 24, I drew in this ghost feed. Surprisingly, I nailed it. It literally came up to that level and has now given us a short signal. It was kind of uncanny that I literally nailed it.

So, interesting. Is Tesla about to collapse?

$XLY, the consumer discretionary sector, contains companies such as Amazon and Tesla, as well as Home Depot. Home Depot might also be under pressure. In fact, it is. It’s in a bear phase—an avoid phase.

This could imply that we’re seeing less renovation activity because people can’t afford to renovate their homes.

Amazon is still doing okay because people can still buy things, but when it comes to bigger purchases, there appears to be more weakness.

The sector itself, $XLY, is definitely under pressure. We can look at some of the other stocks. Here’s Nike at multi-year lows. We can also look at TJ Maxx, Starbucks, Booking, and McDonald’s. McDonald’s, I believe, is also around multi-year lows.

So we’re seeing broad weakness throughout this sector, with Amazon being one of the major exceptions.

Maybe we can find equal-weight consumer discretionary. There it is: $RSPD.

The equal-weight consumer discretionary sector is considerably weaker than $XLY. I just showed you why. $XLY has a very large weighting in Amazon, and Amazon is doing okay, as I just showed you. But many of the other stocks within the sector are not doing well at all.

Sometimes it’s useful to look at equal-weight sectors. In this case, equal weight means that all of the stocks within the sector contribute equally to the index. You can see that equal-weight consumer discretionary is in a caution phase and very close to an avoid phase.

The same goes for equal-weight utilities, although utilities look fairly similar either way. This is $RYU, the equal-weight utilities fund. If I compare it with $XLU, the picture is fairly similar.

Overall, several sectors are doing poorly. The most troublesome is $XLY, consumer discretionary, because this represents an important part of the U.S. economy: discretionary spending. If that fails, then look out below.

Another sector that I highlighted before is $XLC, communication services, with stocks like Google and Meta Platforms making up a very large percentage of the fund.

We can also look at equal-weight communication services. There is $RSPC, and this one looks considerably weaker. It has already been in a bear market since as early as June.

Overall, this is not a very strong indication. The market is basically being buoyed by technology, $XLK, and some of the other sectors, such as semiconductors.

For example, semiconductors here are XSD. They’re doing okay, but compared to XLY, consumer discretionary, they’re doing much worse. This is a warning sign for stocks for sure, so we’ll be watching this very closely and seeing where this leaves us, especially with the current events in the Middle East.

Well, they’re going from bad to worse, I suppose.

Let’s just look at the S&P 500. We are approaching the green support/resistance line on the four-hour chart. We can see the price action of the futures. These are S&P 500 futures.

We can see a couple of pullbacks toward the blue support/resistance line. By the way, these are my new 8.0 indicators, so you can see that they’re now providing actual arrows showing where I would be buying. Right now, we’re on a buy signal.

Friday ended not terribly, one way or another.

There is a good chance we will again retest the blue support/resistance line, which is currently around 7,611.9. I’m reading it off the chart here. If we don’t hold here, then we most likely will continue lower toward the red line at around 7,480. On the daily chart, this would correspond to this blue support/resistance line and slightly lower.

We’ve had similar patterns in the past where we touch the green line and then rally toward new records. Is this time going to be different? Nobody knows.

Let’s switch gears. Currently, we’re looking at the U.S. dollar versus the Japanese yen, and this is the Treasury intervention back in late July. Notice the intervention lowered the price exactly to the blue line.

You can find out more about these indicators.

We had a small rally, and now we have another leg of this drop. I would call this critical support—the red support/resistance line. It’s at 153 yen per dollar.

If this doesn’t hold, then look out below. We could see a significant move lower for the U.S. dollar versus the Japanese yen. I think somehow USD/JPY is a leading indicator for the Dollar Index itself because this is the drop that we saw here.

Again, we’re trading right now around the blue line. The U.S. dollar is, technically speaking, still in an uptrend, so I would be thinking about buying it if I were trading it. But the way things are going, especially with the Japanese yen, I’m much less sure of that.

Especially if we break that 153 level. If we break below it—close below it, considerably below it—then we could just collapse, and so could the dollar against other currencies.

Right this instant, the dollar still seems to be hanging on. But there is this red line for the dollar at 97.8. A break below 97.8 on DXY would spell a new bear market for the dollar, just like we had back here in 2000.

Notice we made lower lows and lower highs until finally we turned around back in March of this year and started making higher highs and higher lows. If this is one of those higher lows, then we should rally pretty soon. If we don’t, then look out below.

Gold is, right this instant, acting appropriately. It does not like the fact that the dollar is trying to stabilize and is in an uptrend.

When the dollar is in an uptrend, gold, by extension, is technically speaking in a downtrend. We’re waiting to load my indicators here, but gold has entered a new downtrend.

Okay, it looks like we lost connection, possibly.

For some reason, the daily chart doesn’t seem to be loading, so I’m going to go to the weekly chart for gold. Here is gold on the weekly time frame.

Again, gold has closed below the red support/resistance line. It had a small rally and yet again closed below it this week. There is weakness in the gold and precious metals sectors.

This is likely related to the fact that the dollar is definitely still in an uptrend. The latest signal was a buy signal for the dollar. Again, this is a weekly chart. My daily chart, for some reason, had a hard time loading.

What I’m trying to gather is that gold, technically speaking, is giving us a sell signal. This will entirely depend on the dollar, and especially the Japanese yen. If the Japanese yen continues lower and cracks the 153 level or so, then we will most likely see a rise in gold prices. But right now, we’re still seeing a potential bear market for gold.

So I would hold off on buying anything gold-related for now.

That’s it for this week’s recap. Head over to MasterChartsTrading.com and sign up for the products. The trading indicators are available for TradingView.com.

You can pretty much trade anything under the sun on most time frames. For example, you can trade on a four-hour chart, a weekly chart, and obviously a daily chart. Tesla, which I pointed out as early as July and put in this ghost feed, I basically nailed.

You can use these charts and my indicators to predict, or at least time, the price action for stocks. They work especially well for stocks. With the newsletter, I send out daily alerts and weekly members-only videos.

Of the two subscription options I offer, yearly and monthly, the better deal is, of course, the yearly subscription because you get almost 20% off, which is equivalent to about two months free compared with the monthly subscription price. The best overall deal is to get both the trading indicators and the newsletter.

That’s it for this week’s recap. Again, don’t forget to hit the like button, give the video a thumbs up, and leave a comment. Have another great trading week.

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​(00:00) Securities Covered
(00:30) Sign-Up Here: https://www.masterchartstrading.com/store/c1/Featured_Products.htm
(02:15) Stock Futures Make a Stand at Key Support
(05:20) Bearish Divergence in Transports Raises Red Flags for Stock Bulls
(08:08) Bitcoin Appears Poised for a Bullish Breakout
(12:27) Japanese Yen Leads Renewed Currency Rally Against the Dollar
(15:37) Gold Battles to Hold Support in Bearish Territory


Stocks Covered In Members Only Video:
Market Breadth, SPY, DIA, QQQ, IWM, RSP, Magnificent 7, Discretionary, Real Estate, Industrials, Semiconductors, Retail, Aggregate Bonds, Treasury Bonds, China
Amazon, Caterpillar, Disney, Google, Honeywell, Intel, 3M, UPS
Beam Therapeutics, Cabaletta Bio, 3D System, Estee Lauder, Pulmonx Corp, NovoCure, Skyworks



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#Trading #Bitcoin #Gold #StockMarket #StockTrading  #JapaneseYen #Dollar #MarketAnalysis #TechnicalAnalysis  #BTC




We’re currently looking at the Dow Jones, but let me go back to the S&P 500 for a second before we get to the Dow.

Looking at the S&P 500, we’re basically next to record highs. The records are just another 1% away.

The action is very bullish. It can be better visualized on the four-hour chart, so let me show you that.

This is a four-hour chart of the S&P 500 futures.

Following the recent surge around the end of July and into August, we gapped higher. There’s still a small unfilled gap here from around August 26.

We surged, made new records, and have been trading sideways. We then pulled back to what I call logical support levels.

Now that my new 8.0 indicators are out, you can turn these blue arrows on or off. Every time we touch or move below the blue support/resistance line and then close back above it, we can get a potential buy signal.

For example, on this four-hour futures chart, you can see those arrows here. We made a low below the blue line and then closed above it. That’s a buy signal.

This is a trade you could have entered in early September. The unfilled gap still remains below us, but at this point we could simply make new records. It looks possible.

There is some resistance from the August 28 candle, but it’s not that significant, and I think a breakout to new records is quite likely.

Let’s look at some of the things that trouble me, although not dramatically yet.

We’re looking at the Dow Jones Industrial Average. It’s very similar to what I just showed you for the S&P 500. We surged, made a new record, and have since been trading sideways to slightly lower.

The problem is this chart.

This is transportation, symbol IYT. You can see that while the Dow Jones has been trading sideways, transports actually dropped significantly, especially from August 26 into September 1.

According to Dow Theory, the Dow Jones Industrial Average and the transportation sector should generally confirm one another.

In this case, however, transports have suddenly moved significantly lower. I’m not sure yet whether they’re going to lead the broader market lower or whether they’ll recover quickly.

I looked at the components of IYT, and most of the transportation stocks are moving to the downside.

What does this mean in terms of Dow Theory?

It’s not a huge warning yet. The main thing I can say is that the Dow Jones is more or less trading sideways while transports are moving down.

Theoretically, transports could be acting as a leading indicator. In other words, transports could lead the Dow Jones lower. By extension, if the Dow Jones drops, the S&P 500 would likely drop as well.

Could that happen? It’s possible.

Could the transportation sector recover instead? That’s very possible as well.

Let’s watch this into next week and see if we get any additional clues about the direction of the market.

The big news, I think, is Bitcoin.

Bitcoin has moved sharply higher. If you listened to my previous videos, I’ve been saying that since around June, when Bitcoin stopped making significant new lows, there was a strong chance of a rally.

We made a marginal new low in late June or early July, but after that we stopped making new lows.

I was saying there was a very strong chance of a Bitcoin rally because of the way the indicators were behaving.

You can see how the indicator lines were curving down and getting closer together. They became very close around July.

Usually, when the lines get closer together, it takes less energy for price to move from one level to another.

The bullish level is above the blue line, while below the yellow line we were clearly in a bear market.

Bitcoin did rally, and now we’re almost at the blue support/resistance line. We’re only about 4% away from what I would consider a new bull market in Bitcoin.

A bull market implies higher highs and higher lows.

Let me show you what a previous Bitcoin bull market looked like.

This is a relatively recent Bitcoin bull market, and it’s a very similar situation.

Notice that Bitcoin was below the yellow line in January 2023. It first moved above the red line and then broke out above the blue line.

That was the beginning of a new bull market for Bitcoin in early 2023.

From there, we started making higher highs and higher lows.

Notice again those buy arrows, where you could potentially look for buying opportunities. They’re now labeled using my new indicators.

You can get those indicators through MasterChartsTrading.com for use on TradingView.

Bitcoin remained in a very nice bull market for a long time, beginning in 2023 and continuing until November 2025, when it finally reversed back into a bear market.

That bear market proved pretty nasty because Bitcoin dropped from around $94,000 to as low as approximately $60,000.

If you were selling it short, there were opportunities there. I don’t normally sell short. Sometimes I do, but very rarely.

Now we’re seeing a similar situation again, where Bitcoin is approaching the blue support/resistance line.

A breakout above that blue line would mean a new bull market for Bitcoin according to this system.

How high can we go?

The first obvious area would be a return toward $100,000. That’s not an especially large move for Bitcoin. Beyond that, the sky is the limit.

In the past, Bitcoin bull-market runs have been tremendous—sometimes doubling, tripling, or even quadrupling.

I would consider going long Bitcoin once it breaks above approximately $82,000, around this blue support/resistance line.

The exact level on this chart is currently $82,871. This is Bitcoin versus the U.S. dollar on Coinbase.

Bitcoin looks bullish. It looks like it wants to go higher. I would be strongly considering a long position once we break above that blue line.

Let’s switch gears.

We’re going to look at USD/JPY: the U.S. dollar versus the Japanese yen.

Until very recently, the U.S. dollar was clearly winning. We reached approximately a multi-decade high for the U.S. dollar against the Japanese yen. By extension, that represented a multi-decade low for the Japanese yen against the dollar.

Here you can see the intervention that occurred around July 30 and 31.

USD/JPY dropped significantly to the blue support/resistance line, but then recovered.

I’ve been saying that moves this sharp generally don’t happen in a vacuum and simply disappear.

What I think may be happening now is that we could duplicate a similar move to the downside.

The previous decline was approximately 4%. Something similar could unfold in the near term as long as we remain below this red support/resistance line.

For currencies and Bitcoin, I use the blue and red lines as the primary markers for bullish and bearish trends. For stocks, I prefer to use the yellow line.

If this were the S&P 500, I would use the yellow line as the primary marker for determining whether we’re in a bull or bear market.

But USD/JPY is a currency pair. Once we drop below this red support/resistance line, we can consider the pair to be in a bear market.

It does look like this currency pair may be leading other dollar currency pairs lower.

We can see weakness in the U.S. Dollar Index as well.

The Dollar Index dropped pretty significantly on Thursday, September 3.

As of right now, however, I’m still thinking about the dollar as being in an uptrend because we previously closed above the blue support/resistance line and have not yet closed below the red support/resistance line.

If and when we close below the red support/resistance line, I will consider the dollar to be in a downtrend.

That hasn’t happened yet.

For now, I still consider the dollar bullish, but the way things are developing, there appears to be a potential reversal brewing, as I just showed you on the Japanese yen chart.

If we continue dropping and close below the red support/resistance line, that would confirm for me that the dollar is now in a downtrend.

Since we trade precious metals, this is important.

Again, this is gold divided by the U.S. dollar—XAU/USD—so gold is on top and the dollar is on the bottom.

The dollar, as I just showed you, appears to be weakening. If it closes below that red line, it could get significantly weaker very quickly.

If you look at this chart of gold, gold has closed below its red support/resistance line. Technically speaking, according to my system, that puts gold in a bear market.

But notice what happened next.

Gold rallied pretty strongly. We almost touched the blue support/resistance line. We got pretty close, but then closed below it again.

Right now, gold’s fate really rests on the dollar.

If the dollar continues lower, as I just showed you, gold will likely rally. Conversely, if the dollar holds support and rallies, gold will likely come under pressure.

Gold miners are doing much better.

You can see gold miners here with these blue arrows, meaning we already have buy signals for the gold miners. This is GDX.

Because of the way the dollar is acting, however, I’m not 100% convinced yet about the miners or the fate of gold. I’m waiting for the dollar to resolve itself.

But if you’re impatient, I would be buying gold miners right now. GDX is currently on a buy signal, and this is a good area to consider buying it.

Silver is weaker than gold. It remains below the red line, so for now silver remains on a sell signal.

Again, however, if the dollar collapses, silver should benefit.

That’s it for this week’s recap.

Head over to MasterChartsTrading.com and click on Sign Up to choose one of the products.

I have these trading indicators—the green, blue, red, and yellow lines—which you can use to trade pretty much anything under the sun.

You can use them on TradingView.com, and you can have a free TradingView account.

Once you sign up for a TradingView account, come back to MasterChartsTrading.com and sign up for the indicators. I’ll give you access to the new 8.0 indicators.

The 8.0 indicators include projections into the future as well as signals showing potential buying areas, so there are some very useful new features.

If you subscribe to my newsletter, I send out daily alerts and weekly members-only videos.

For example, this week we’ll be covering ETFs, large-cap stocks, and various speculative securities that we’re considering buying.

The best deal is to get both the trading indicators and the newsletter. You can subscribe monthly or yearly. The yearly subscription gives you approximately two months free compared with paying monthly.

That’s it for this week’s recap.

Let me know if you have any questions. Thank you for watching, and have another great trading week.