High Yield Funds vs. Stocks

High yield corporate bonds (in red) are highly correlated with the stock market, as one would expect.  The better the business prospects for companies, the better they can pay their debt.  Notice what happens when the correlation (bottom panel) approaches the negative - it usually marks an intermediate-term bottom in stocks.  Will it work this time?  Check out Kimble Charting Solutions for a little different take on the same phenomenon.