The U.S. stock market has been chugging higher in a clear display of momentum since April 18th. The market has also shifted from an above average difficulty in execution to a much more precise and reliable scenario. Trade risk has swung from high to relatively low.
Trade Risk Indicator
The Investor Boot Camp Online proprietary Trade Risk Indicator is a unique tool providing investors with a guide to the reliability of executing buys and sells. It's both a quantitative and qualitative measure of general conditions in the equity markets. Changes in the easy to use visual indicator will move the red component representing risk higher or lower relative to the green component.
The Trade Risk Indicator is one of five broader market indicators including Market Risk, Cycle, Sentiment and Volatility.
Prior to mid April, trade risk was high as the market presented investors with two pull backs that both appeared to be new corrections. While fake outs are normal in some markets, the character of the pull backs had many elements of bearishness including limited breadth in market leaders.
Now the market is presenting numerous new break outs. The combination of true break outs from bases and improved trade risk presents a significantly different environment. The shift from what has effectively been a struggle from as far back as early 2012, could be the early signs of the beginning of a significant intermediate term advance in the stock market.
Growth stocks have been out performers despite the emergence of more defensive sectors and some cyclical stocks. Resource stocks remain out of favour and the TSX is still classified as in a correction.
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