A number of influential money managers have given voice to concerns about the high-yield market. Jeffrey Gundlach of Doubleline Capital is the latest market pundit who said that it was too early to buy high-yield junk bonds.
Looking at this long-term chart of the SPDR Barclays High Yield Bond ETF (JNK), above, we can see that prices for JNK are down to the lowest levels we saw in 2010 and 2011, after declining for the past year and a half. This level is old, but features critical support at $35. A break of these lows could open up a deeper decline to perhaps $30. The On-Balance-Volume (OBV) line is pointed down, and tells us that volume has been heavier on weeks when JNK closed lower. A declining OBV line implies that traders and investors are liquidating long positions. Whether JNK continues lower or not is not important. What is important is that high-yield bonds are at a "stress point," and they should be on your daily watch list.