Municipal Bond ETF On a Free Fall

The municipal bond ETF MUB after rallying and retracing about 61.8% of the decline from the November 2012 highs to the December 2012 lows, it is now close to retesting the lows. The ETF is oversold but any correction may be short-lived. The losses of those who sold stocks late last year to buy into bonds funds are mounting.

MUB_20130314

The RSI(14) is at 20.07 but as I have said several times in the past this means nothing for the longer-term. It only takes either a flat market for a few days or a couple of days of a small upside correction for the RSI(14) to get to neutral territory. I mean this indicator works better as a momentum indicator as I have shown before with examples.

MUB closed yesterday at $109.67 and the December 2012 low is at $109.17. If support at $109 is violated, the next stop is $108 and it may be a quick ride.

Disclosure: no relevant position at the time of this post and no plans to initiate any positions within the next 72 hours.. 

Charting program: Amibroker (Charts created with AmiBroker – advanced charting and technical analysis software. http://www.amibroker.com/”) 

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