Tuesday, February 6, 2018

Risk on, or risk off?

Mid-week market update: In view of this week's market volatility, I thought that I would write my mid-week market update one day early. After the close on Monday, my Trifecta Market Spotting Model flashed a buy signal. As shown in the chart below, this model has been uncanny at spotting short-term market bottoms in the past.

Now the Trifecta model has flashed another buy signal as the market faces a possible meltdown from volatility related derivative liquidation. Is it time to take a deep breath and buy?

To be sure, it is hard to believe that a durable bottom has been made. As recently as Sunday, Helene Meisler tweeted the following anecdote of investor complacency.

Could complacency turn to fear that quickly for a washout bottom in just two days?

The full post can be found at our new site here.

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