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The Risk-Reward Market Report

Risk Model

Risk-Reward Advisor

Indicator Rating Forecast
Risk Index 100 normal risk
Economy Index 60 slow/weak growth
Value Index 50 - 6.2% return fair value
Current Concerns Index 50 neutral outlook
Short-term Trend 0 bearish
Medium-term Trend 0 bearish
Dominant Market 0 bearish
Market Leader 0 bearish
Risk-Reward Advice 260 Defensive Bias <400


Risk Model Status: Defensive Bias - Primary long-term bear trend with a short-term down & intermediate-term bear trend. Primary long-term trend is the qualifying process that gets you into the race and at the starting line. Intermediate-term trend starts the race with the starting (green) flag.

Market Opinion: Wild, roller coaster market this past week. Investor confidence - wow! No wonder people run into bonds. Past week has been sideways to down. Need to wait to see which way we go. Don't believe we stayed long enough on the bottom to revert back to a bull market yet. Bear bounce with momentum indicators (so far). Small caps made the first move up on Thursday. We still see S&P 500 support around 1150, then 1050 area. Yearly performance for the S&P 500 is - 6.3%. We wait for what the house deals for a hand next week, & see if the odds increase or decrease.

Long-term Opinion: It all boils down to "it's the economy, stupid." Finance represents the banking system. The Financial sector makes up 15.5% of the S&P 500. With this sector showing no signs soon of gaining speed we don't see any sustained rallies above the previous high. "The Great Recession" was worse than previous estimates and recovery not as robust.

Left-over long term problems affecting the recovery progress... Finance, housing and unemployment continue to have a serious drag on the economy. All of this has a negative impact on small biz and the average consumer. (big economic drivers) This in turn will keep retail spending & confidence low. Then add the government spending & debt problems on top of everything! CAUTION - Major negative: World &USA Debt - Serious debt problems with no easy solutions.

Long-term investors (401K, IRA & Roth IRA): Bear Market - until the MACD crosses back up on the market leader chart, continue with a defensive bias. Consider agriculture, energy, gold and silver on pullbacks.

Chart of the Week: This breadth indicator is based on the number of stocks on Point & Figure buy signals. Getting closer to the 2009 lows. In a bull market would want above the 50% line. Easily beat the 2010 correction low.

$BPSPX - S&P 500 Bullish Percent Index


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