Watching high income (or high yield) bond funds has always been a good indicator of risk for the overall market, especially for stocks.
Today’s chart takes a look at the Pimco High Income Fund ETF (NYSE:) and why investors need to be watching this ETF (as well as others in the high yield space).
As you can see, things got ugly back in 2020 when price support gave way. From the 2020 low, PHK rallied sharply before settling in a nice uptrend price channel.
This ultimately led PHK back to the 2020 breakdown area (old support, now resistance). And over the past year, PHK has not been able to break out above this resistance—see red arrows.
PHK is now testing its spring 2020 low. This key price support level is even more important because PHK is also testing the lower end of its up-trend channel at (1).
This high-income ETF would send a bearish message to stocks if support breaks at (1). Stay tuned!