Interday, our primary market risk barometer has reversed direction officially bringing the defensive team back on the field for the second time this year. This does not mean that a market collapse is on the horizon but it does reinforce our previous blog on 7/14, to pay attention and have a game plan in place. This indicator is a risk barometer for the US equity market. While this risk barometer is not the only voice in the room, market leadership and asset class relative strength is just as important but with that being said it is now speaking as loudly as possible. There is nothing else for this indicator to provide in terms of a warning, and it comes at a time of the year when the markets always seem to pitch a few curve balls. The defensive team is on the field and wealth preservation moves to the forefront. This is the “black & white” part of the equation, and pretty much the only aspect of this that comes with such stark contrast. The application of defense at the 64 yard line is something that varies from one craftsman to the next, often from one client to another and is best implemented with a respect for overall market trends and asset class rankings. Will this be the 3rd head fake since May of 2013 and reverse back up only after a mild 6% or 7% pull back in the broader market index’s or will this be the time nobody listens and civil unrest around the globe sends markets lower?
Always consult an investment professional before making investment decisions. Nothing in this post is to be construed as investment advice. All investments have a risk of losing value.