$LQD Symmetrical Triangle Break Point, 5,000 July 106 Puts Open (Charts), Investment Grade Corporate Bond ETF

Watch LQD here, the investment grade corporate bond ETF.  It's trading in a symmetrical triangle near the break point and is being supported by the 50 day moving average.  LQD's relative strength index is at 52 (tug of war).  On the second chart you can see that LQD is trading in an ascending channel (uptrend) right at support.  A move is coming in either direction. A breakdown would violate the three support levels I just mentioned so keep an eye out.  Are the 5,000 puts there for protection?

If a breakdown ensues, LQD could trade down to $103 which is the 200 day moving average as of today's close and also January 2010 support.  Also check out the 5,067 July put options open at the $106 strike.  Those contracts are in the money as LQD closed at 105.81 today.  Any thoughts on investment grade bonds here?  JP Morgan's Chief US Equity Strategist thinks corporate bonds could be the next bubble (Bill Gross post from today).  There could also be issues with maturity rolls going forward (find S&P link).  As of 6/15/2010, the 12-month yield on LQD was 5.27%, weighted average coupon of 6.05%, weighted average maturity of 12.20 years and an effective duration of 7.15.  Top holdings include Verizon, Wells Fargo, Citigroup, JP Morgan Chase, Wal-Mart, AT&T, Goldman Sachs, American Express, Merrill Lynch & Co. Inc, General Electric etc..  A bunch of financials (source: iShares).  Charts courtesy of StockCharts.com.

LQD (iShares iBoxx Investment Grade Corporate Bond Fund)

5,067 July 2010 $106 LQD Puts Open (Yahoo Finance)