FractalTrader

Market Risk update

SPY/GLD  
SPY/GLD  
88 3 0
I haven't posted this is a few months. There are plenty of people out there calling for a bear market now, and while that's certainly possible, I'm still not seeing the signs just yet.
really puts together the puzzle. Will get interesting..Nice work
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Can you analyze these charts and give a best guess as to what it is telling you?
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First, the picture has changed somewhat since this post, which was nearly a month ago. The charts themselves use renko and linear regression channels to provide a context around trend. As for what it's measuring. IWM/SPY is attempting to gauge interest in small caps vs large cap stocks. The thought here is that there should be a rotation out of small caps (more risky) when the perception of risk is there. IWM has historically outperformed SPY in the long term, which the chart also shows. The SPY/GLD, SPY/TLT ratios measure similar things. Gold and Treasuries are generally safe havens for capital, and should outperform when investors are risk averse. The DOW chart is measuring % stocks above 100MA. This is a breadth indicator, and should begin to fall as fewer stocks are able to maintain their trend. The VIX is measuring demand for put protection. Naturally there is no such thing as a golden indicator, which is why I believe it's important to look at more than one thing. Since this post, many of these have turned back higher with the VIX nearly back to new lows ,and the SPY/GLD ratio nearly back to new highs. I'm still thinking there's more upside . Hope that answers
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