High yields can often be a great leading indicator for the stock market.  Many investors use long-term moving averages to make buy and sell decisions.  The chart below represents 6 different high yield mutual funds with popular moving averages applied. 


The 50EMA/200EMA crossover doesn’t have a perfect batting average, yet the crossover hasn’t done too bad over the past few years. 

Consider the following…. A crossover sell signal took place back in July 2007 (suggesting equity weakness was ahead) and a crossover buy signal took place in June 2009 (suggesting equity strength was ahead).  Now for the first time in 4 years, moving average crossover sell signals are taking place! 

With this crossover taking place and the Shanghai breaking a 20-year support line of late (see post here)  should investors keep long-term monies/401k monies fully invested/exposed to risk?


How The Recent Decline In Stocks Looks "Eerily" Like Major Bear Markets Of The Past