the Risk Asset Index presented inward the previous post. This mensurate captures whether direct chances assets are overbought (significantly higher upward zero) or oversold (significantly below zero) over a two-week horizon. (See the higher upward linked postal service for the specific assets that contain the measure)
We tin mean value of this equally a form of short-term persuasion gauge: when direct chances assets are overbought, confidence inward global economical increment is strong. When direct chances assets are oversold, fears nigh global recession are relatively strong.
You tin come across from the nautical chart higher upward that this, similar most persuasion gauges, serves equally a reverse measure: it's when traders are most fearful of direct chances assets that nosotros are most probable to come across bullish moves emerge in addition to vice versa.
Interestingly, my initial studies advise that expectations for the S&P 500 Index (SPY) over the next 5 days tend to endure positive when the Risk Oscillator is higher upward xv or below -15. Above 15, nosotros come across around positive momentum effects: bullish persuasion carries over to the side past times side few days earlier expectations plough negative. Below 15, nosotros come across hateful reversion in addition to brusque roofing over the next 5 days.
With around tweaking, this may brand a worthwhile timing indicator.
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