The Risk On/Risk Off Gauge Just Flashed Red

November 20, 2022

Mish's Daily

By Mish Schneider

Written by Keith Schneider (on behalf of Michele Schneider) and Wade Dawson

It can take time to determine what financial news to trust and who to follow with many conflicting market opinions and a 24-hour-driven news culture.

That's one reason we use a rules-based methodology and quant modeling combined with our proprietary trading indicators to help us make informed decisions about where the market is headed next.

The Risk On / Risk Off Gauge is one example of how we utilize automated mechanical models. Our risk gauges are currently alerting us to a prospective trend shift, and because of this, traders should exercise caution.

The Risk Gauge retreated to a risk-off reading. The Risk On / Risk Off Gauge is flashing a red bearish signal, making the environment conducive for risk management.

It does not mean the S&P 500 can't go up by 200 more points, but the potential downside is a real possibility with limited upside.

Our risk gauge is based on five inter-market relationships and is available in our Big View Premium research service. The Gauge is intended to alert and confirm changes in trend strength.

The risk gauge suggests that the rally that began in Mid-October could turn into a correction soon.

We keep an eye on many other indicators and when viewed collectively they provide further insight.

Grandpa Russell (IWM) had been one of the strongest indices over the past few weeks, but IWM closed this week back below the 200-day moving average and is showing signs of further weakness.

Several other Big View indicators are looming, and one to quickly mention is that the leading sectors for the week were all risk-off plays like utilities (XLU) and consumer staples (XLP). This is signaling an end to the current rally is near.

We understand that making money in today's market is no easy task, but our proprietary research tools can help you succeed. With our trading indicators and risk analytics, you'll be able to make money and trade confidently.

Rob Quinn, our Chief Strategy Consultant, can provide more information about our Big View Premium service and can offer you a complimentary one-on-one trading consult. Click here to learn more about Mish's Premium trading service and Big View.

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