Market Risk Update
Our risk assessment at Friday June 14th, 2024 remains bullish.
Eight out of the nine measures below signal Risk On, with only the inverted yield-curve signaling Risk Off at this stage:
Two of the above measures (#3 and #4) consist of pairs. The leading indicator provides the Risk On signal and a lagging indicator is used to signal Risk Off.
The yield curve used in #3 and #4 has been inverted for more than eighteen months and is now largely ignored by the market. But don't underestimate this as a recession indicator -- the economy normally only contracts after the inversion ends.
1. Dow Theory
Both the S&P 500 (light blue) and Nasdaq 100 (green) have been in a strong up-trend since early 2023, signaling a bull market.
2. Moving Average Crossover
The 10-week weighted moving average (WMA) is above 50-week WMA on the S&P chart below, confirming a bull market.
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Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.