If you follow this blog regularly, you will know that i periodically post the results from a compilation of indicators that I call the “Bear-o-meter”. The Bear-o-meter is not a crystal ball. But it is a pretty decent scorecard of measuring potential risk vs. return. The compilation consists of:
2 sentiment indicators (VIX, Smart/Dumb $)
2 trend indicators (50 & 200 day MA’s)
2 breadth orientated momentum indicators (New high/low and % stocks over 50 day MA)
2 specific breadth indicators (Cumulative AD line and INDU/TRAN confirmation)
1 fundamental indicator (trailing PE)
1 cycle indicator (seasonality)
Each indicator has parameters that I can quantitatively apply a score to. Some get higher weightings than others (e.g. 200 day MA gets high rating than the 50 day MA).
On my last report of the Bear-O-meter on August 23rd ( https://www.valuetrend.ca/bear-o-meter-turns-bearish/) I noted that the compilation had slipped into the “higher risk” zone. You will note that this zone has 3 levels within it. The reading was “2” in August.
Recently, we’ve seen the VIX move into a neutral level (the VIX was well into my noted “complacent” zone of below12 in August, now its around 17). However, we’ve also seen the S&P500 (which is what the Bear-ometer is applied against) slip below the 50 day MA – effectively offsetting the reversal of the VIX. Thus, we remain in a high risk environment according to the Bear-o-meter. Market volatility has a greater than normal chance of being elevated for the time being – it ain’t over ’til its over.
I continue to hold cash and a small inverse position within the ValueTrend Equity Platform.
Apple’s rally is bullish for markets
Recent strength by AAPL is one positive for the market – looking out beyond the near termed risk noted above. Note the break of its downtrend with a nice test, a bullish MA crossover and a volume confirmation. AAPL is a major influence on the stock market – a bullish move will increase the potential for market strength going forward.
Don’t miss Keith speaking at the MoneyShow tomorrow (Friday September 16, 12:45pm)!
Here is the link Details