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High yields have been GREAT assets to own when above key moving averages as well as a decent leading indicator for the stock market. A few leadership examples…high yields peaked in 1998, before the broad market started its decline from 2000 to 2003. They started heading lower in 2007 before the broad market and put in a low in the fall of 2008, before the broad market did in March of 2009.
In the 6-pack above, for the first time in months, high yield funds have each broken below their 50-EMA lines and broken rising support. The decline has been small so far, around 2% off their highs, yet price action that should be respected to say the least!
Since last December the high yield funds have crossed below the 50-EMA, yet did not break support. With the steep support line breaking, they are sending a “note of caution” to the equities market place, that hasn’t been sent in months!!!