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2020 | June Risk Odometer

FCWS View June 2020 | Outlook: Defensive
Wednesday, 03 June 2020

2020 |  June Risk Odometer

For the 3rd consecutive month, our Current Outlook remained at our lowest level of “Defensive”.  Our Risk Odometer reading did move up one notch from -3 to -2 this month as our Technical Price Action Indicator turned positive.  Improving stock market prices turned our Technical Price Action Indicator positive, but this optimism continues to be outweighed by our negative fundamental indicators.  Our Outlook reflects both technicals and the fundamentals, and the fundamental warnings dominate at the current stage, thus keeping our outlook defensive. 

Last month, we mentioned the disconnect between the recent stock market rally and the economic data.  That disconnect grew wider in May.  The S&P 500 has now recovered nearly 75% of its losses and is down only 5% on the year at the time of this writing.  We find this resiliency and optimism remarkable given 15% unemployment we are experiencing today.  The current levels of the S&P 500 are now back at levels we saw in late 2019 when unemployment was 3.5%!

 

2020 | May Risk Odometer

FCWS View May 2020 | Outlook: Defensive
Thursday, 07 May 2020

2020 |  May Risk Odometer

Our Risk Odometer moved deep into negative territory to -3 and our Current Outlook remains at our lowest level of “Defensive” for the 2nd consecutive month.  The economic and earnings data we are witnessing is, not surprisingly, extremely negative and will likely remain negative for the near future.  The stock market, though, has recently rallied strongly from the lows seen in late March, puzzling many economists and market strategists.  Economic data and the stock market outlook seem to be at odds.  We have fielded many questions about this difference and our stance is two-fold.

We believe both can be correct.  In our opinion, the markets appear to be optimistic about the belief and speed of the recovery.  We believe, in the long-run (i.e. measured in years), the economy will fully recover, and for that reason, we believe the optimism of the markets is justified. 

2020 | April Risk Odometer

FCWS View April 2020 | Outlook: Defensive
Monday, 06 April 2020

2020 |  April Risk Odometer

For the 3rd consecutive month, we have moved our Current Outlook down another level to “Defensive”, the lowest of four possible levels.  The downgrade comes as significant price deterioration in the stock market turned our Technical Price Action negative, moving the overall Risk Odometer score to zero.

Given the lag of Economic Indicators and Earnings indicators, I would expect the overall score to turn negative in the months ahead, keeping our Outlook Defensive.  We are not expecting this situation to end quickly and are advising our clients to be cautious and maintain a long-term perspective. 

2020 | March Risk Odometer

FCWS View March 2020 | Outlook: Use Caution
Friday, 06 March 2020

2020 |  March Risk Odometer

We are moving our Current Outlook down one notch again for the second consecutive month, from “Cautiously Positive” to “Use Caution”.  This is one level above our most cautious outlook.  The downgrade in our Current Outlook was due to our Risk Odometer reading moving from +2 to +1, caused by our more market-sensitive indicators. 

2020 | February Risk Odometer

FCWS View February 2020 | Outlook: Cautiously Positive
Wednesday, 05 February 2020

2020 |  February Risk Odometer

We have moved our Current Outlook down one notch, from “Positive” to “Cautiously Positive”.  Although the coronavirus has caused volatility and fear to start the year, this is not the reason for the downgrade in the outlook.  The downgrade was caused by something much more concerning…weakening fundamental indicators.

2020 | January Risk Odometer

FCWS View January 2020 | Outlook: Positive
Monday, 06 January 2020

2020 |  January Risk Odometer

Happy New Year to all our readers! I hope everyone had an enjoyable holiday season. In terms of the markets, 2019 could not have been more different from 2018, as almost every asset class experienced positive returns. Trade war headlines dominated the news in 2019, but the Federal Reserve’s three rate cuts were the dominant force behind the stock market rally. Even the bond market participated with outsized gains. It was truly a remarkable year.

2019 | December Risk Odometer

FCWS View December 2019 | Outlook: Positive
Tuesday, 03 December 2019

2019 |  December Risk Odometer

Screen Shot 2019 12 03 at 10559 PMThis month, we are introducing a new format to our Risk Odometer. Our Current Outlook Table to the right of the odometer now shows 4 categories: Positive, Cautiously Positive, Use Caution and Defensive. Our current stance will be highlighted while the other levels will be grayed out. This change was designed to show where we currently stand relative to the different possible outlooks.

For the second consecutive month, our Current Outlook remains “Positive”. Our net Risk Odometer score moved down one notch from +5 to +4 this month. The small change in the net score is merely noise.  

2019 | November Risk Odometer

FCWS View November 2019 | Outlook: Positive
Monday, 04 November 2019

2019 |  November Risk Odometer

For the first time since May, we are changing our Current Outlook from “Cautiously Positive” to “Positive”. This upgrade is the result of improvements in Technical Price Action, notably from improvements in international markets. Global equity markets appear to be rising in sync with domestic equity markets, an important development in how the Risk Odometer views risk.

2019 | October Risk Odometer

FCWS View October 2019 | Outlook: Cautiously Positive
Thursday, 03 October 2019

2019 |  October Risk Odometer

 cautiously positiveFor the fifth consecutive month, our Outlook and Risk Odometer reading remained unchanged at “Cautiously Positive” and +4.  While on the surface nothing has changed again, under the hood it has. Many of the indicators are deteriorating, meaning things could change quickly.  We began to witness the deterioration last month, and the deterioration has furthered into October. For this reason, we remain particularly sensitive to near-term developments.

2019 | September Risk Odometer

FCWS View September 2019 | Outlook: Cautiously Positive
Tuesday, 03 September 2019

2019 |  September Risk Odometer

 cautiously positiveOnce again, our Outlook and Risk Odometer reading remained unchanged for August at “Cautiously Positive” and +4. While on the surface nothing has changed, under the hood it has. The overall score remains unchanged, but many indicators are deteriorating, meaning things could change quickly.

2019 | August Risk Odometer

FCWS View August 2019 | Outlook: Cautiously Positive
Thursday, 01 August 2019

2019 | August Risk Odometer
Current Outlook

Cautiously Positive

Our Outlook and Risk Odometer reading remained unchanged for August at “Cautiously Positive” and +4.  Very little has changed in our indicators and outlook over the past 6 months. The things that are positive remain positive and the things that concern us are still there.  Overall, the positives outweigh our concerns. Our tactical investment strategies remain predominately invested in growth with a small amount in defensive allocations while we closely watch unfolding developments.

2019 | July Risk Odometer

FCWS View July 2019 | Outlook: Cautiously Positive
Monday, 08 July 2019

2019 | July Risk Odometer
Current Outlook

Cautiously Positive

Our Risk Odometer moved down one notch from +5, where it had been since March, to +4 for June. This small change in the overall score has caused us to also change our Outlook one notch lower, from “Positive” to “Cautiously Positive”. Our new outlook means we are still overall positive on the stock market, but with a small amount of caution.

2019 | June Risk Odometer

FCWS View June 2019 | Outlook: Cautiously Positive
Wednesday, 05 June 2019

2019 | June Risk Odometer
Current Outlook

Cautiously Positive

Our Risk Odometer moved down one notch from +5, where it had been since March, to +4 for June. This small change in the overall score has caused us to also change our Outlook one notch lower, from “Positive” to “Cautiously Positive”. Our new outlook means we are still overall positive on the stock market, but with a small amount of caution.

2019 | May Risk Odometer

FCWS View May 2019 | Outlook: Positive
Thursday, 02 May 2019

2019 | May Risk Odometer
Current Outlook

Positive

Our Risk Odometer and Current Outlook are both unchanged for May at +5 and a “Positive” outlook. April was the 4 th consecutive month this year for positive equity market gains and the S&P 500 eclipsed the all-time highs set in January 2017. International markets have also experienced steady gains this year yet remain below all-time highs. Overall, the equity markets continue to trade well despite many economists’ warnings of slowing global growth in 2019.

2019 | April Risk Odometer

FCWS View April 2019 | Outlook: Positive
Wednesday, 03 April 2019

2019 | April Risk Odometer
Current Outlook

Positive

Our Risk Odometer improved another several notches this month, moving from +3 in March to +5.  As a result, we are upgrading our Outlook for a third consecutive month to “Positive”. 

The warning signals our Risk Odometer gave us in December served us well, but those warning signs have largely faded.  There are still indicators near inflection points and the duration of the economic expansion continue to worry pundits, but the objective nature of the Odometer points to far greater positives than negatives.  For this reason, we have moved to a “Positive” Outlook.  We have raised our equity allocation in our flagship tactical asset allocation strategy from 60% last month to 85% in April, coinciding with these improvements.

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