FractalTrader

Market Risk update

SPY/PFM  
SPY/PFM  
106 0 1
As always, a work in progress. But I like looking at these charts. I've started to add notations on each chart such that my own interpretation is more clear.
Again, the concept is to look for signs of rotation to safety. As such, we look at rotation out of small cap (risky) stocks into large cap stocks via IWM/SPY; rotation from growth into dividend (SPY/PFM); rotation from stocks into treasuries (SPY/TLT); rotation from stocks into gold             (SPY/GLD). The VIX             chart measures investors purchasing puts for protection/hedging/speculation. The DOW percent chart is measuring stocks being able to maintain their uptrend, with the notion that the weak stocks will start to fall before the overall trend, as defined by large cap stocks follows.
  • I define the short term as renko green boxes, vs red boxes. Again, renko looks at trend without the time component.
  • I define the intermediate trend as prices coming off a new high, or not. For the DOW percent chart, I use the moving average being in bullish , bearish , or neutral territory.
  • I define the long term trend as the slope of linear regression rising, or not.
  • The VIX             chart is inverse for these interpretations.
Summary: 3 of the 6 charts have a bearish leaning, with 3 either neutral or bullish . None of the charts are completely bearish on all three trend definitions, yet. Rotation to safety makes sense, with expectation that the market is fully capable of making one more run for the highs.

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