It's not in the same physical size as your graphs, but I hope you can see the pattern.
This graph shows the history back to 1982: Not many low risk periods in all that time. Mostly average and occasional high risk markets.
Four components drive this indicator. Two are my own and two are things I've come to find valuable.
There are a variety of ways one can use this information. One could exit the market during high risk events. One could cut back on one's holdings, etc. Low risk times are so rare and have been such good entry points for mid and long term investing, that they have to be considered seriously.
Of all the years I've kept this data, I was most impressed with the long delay between the record high risk reading in March of 2000 to after the 9/11 tragedy when the IW finally signalled relative safety to return to the market place. It waited so long and the market fell so far that I was beginning to think it was broken!
It's a shame that the WTC and Pentagon tragedies had to occur to give that low risk signal. It, I believe, changed the timing of the current low risk period we're now in.
Hi V, I have some indicators that I use for gauging market turns. I've been collecting data since 1982 and the composite of these indicators had been pretty good at calling the turns so far.
The current information shows moderate but rising risk.
It also did a very nice job of showing an over-inflated market heading into 2000 and never bothered to signal Low Risk until after the WTC attacks.
The low risk signals were well timed and strong enough to be believeable.
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