This current market set-up is getting increasingly tricky, but perfectly explains why we created our proprietary Risk Ranges model.
Here’s the deal.
We’re getting increasingly bearish on the U.S. economy. Our investing playbook for the second half of 2018 suggests trouble ahead for the U.S. stock market.
Still, our Risk Ranges haven’t yet signaled bearish on the S&P 500.
The reason why is key.
Our proprietary, quantitative Risk Ranges model is updated daily using:
- price
- volume and
- volatility of any publicly-traded asset to determine its likely daily trading range.
Let's break down how this works conceptually.
If an asset's price and volume are rising, while its volatility is falling, that's bullish. It means investors are buying with conviction.
On the other hand, if an asset's price is falling, while volume and volatility are rising, that's bearish. It means investors are selling with conviction.
In other words, our Risk Ranges are designed to capture the breakdowns and breakouts that are driving financial markets before they happen.
Simply put, our model isn’t yet signaling bearish on U.S. stocks. But, as Q3/Q4 U.S. economic data starts hitting the tape, we could start to see cracks in this epic bull market.
Here's a brief introduction to our Risk Ranges product.
Keep a close eye on those Risk Ranges.
