Long-time viewers of this blog and dshort are aware that I am of the opinion that moving averages applied to the high yield mutual funds are great tools per the ownership of the funds and can be helpful guides to the size of allocations in equity positions.
Months ago the high yield mutual funds crossed below key moving averages, suggesting to harvest shares in high yield funds and lower exposure to the stock market.(see high yield harvest signals back in June)
Below is an update of several high yield mutual funds…
CLICK ON CHART TO ENLARGE
I am a fan of staging into the high yield mutual fund complex and using them as macro risk allocation tools…helping determine the amount of risk exposure an investors should have overall. As can be seen above, numerous high yield funds suggested to harvest in June (crossing below moving averages) and now they have crossed above the 50EMA key moving averages of late. This creates buy signals for the funds and starts sending some positive signals for risk assets as well!
As I shared back in June, using moving average tools on high yield funds is not the holy grail, yet they sure can help per portfolio construction! Breaking above the 50EMA is the first stage towards dipping a toe back in to the high yield fund arena!