Risk Model for the US Stock Market
Our updated risk model for the US stock market still indicates a high risk environment. Also, we expect the high volatility environment to continue with the FOMC summit and the FED press conference coming up in the second half of december.
Swing Traders should continue to be very cautious and either fully stay in cash or test the market with smaller pilot positions only.
Some details of our risk model update:
- the US market remains in a correction, we are still waiting to see a Follow-Through-Day in the major market indices before we should consider getting aggressive again.
- New 52w Lows are higher then new 52w Highs and there are more stock below their 200d MA than above. Both indicators confirmt hat the breadth of market participation is still poor, no matter what the major US market indices are doing. Do not get excited when the SP500 is making new all time highs. It is important to also understand what's happening beneath the surface in the market.
- Up/Down volume is < 1: this confirms that we are currently in a selling environment, major institutions are taking their gains and stepping out of the market, especially those invested in growth stocks. Many of the 2020 growth market leaders are now in a bear market.
- always look at the performance of your own trading over the last week or few weeks. If that is not positive there is no reason to increase market exposure.
Swing Traders should continue to be very cautious and either fully stay in cash or test the market with smaller pilot positions only.
Some details of our risk model update:
- the US market remains in a correction, we are still waiting to see a Follow-Through-Day in the major market indices before we should consider getting aggressive again.
- New 52w Lows are higher then new 52w Highs and there are more stock below their 200d MA than above. Both indicators confirmt hat the breadth of market participation is still poor, no matter what the major US market indices are doing. Do not get excited when the SP500 is making new all time highs. It is important to also understand what's happening beneath the surface in the market.
- Up/Down volume is < 1: this confirms that we are currently in a selling environment, major institutions are taking their gains and stepping out of the market, especially those invested in growth stocks. Many of the 2020 growth market leaders are now in a bear market.
- always look at the performance of your own trading over the last week or few weeks. If that is not positive there is no reason to increase market exposure.
Combing the BEST of two WORLD's: Cathie Wood & Mark Minervini
