Tuesday, March 25, 2014

Junk bonds/High Yield funds acting ok! Do watch for a breakout here!

by Chris Kimble


High Yield funds are considered by many to be good leading indicators for the future direction of the stock market. Above are four high yield funds (Not ETF's) which reflect they are moving higher this year, all are above rising support and above their 200 day moving average lines.

One would have to say, no concerning message from High Yields at this time is being sent!

The inset box reflects that the adjusted spreads in the high yield sector are reaching historically low levels.  History has shown they can stay this low for a long time. Of note, notice that the breakout above resistance back in 2007 was a signal equities were in danger of lower prices in the future. A similar pattern is taking place again in spreads. If the spread breaks to the upside, a concerning message would be coming from the High yield complex!

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