Markets were treading water 2 weeks ago, and continue to do so. Two weeks ago, the news headlines were pointing towards earnings releases. Now, news headlines are pointing towards the US election.
Anyhow, my preferred momentum indicator is risk averse. It indicates that in the shorter horizons (8 to 21 days) – I call this trader horizon – the market is oversold. That is, traders have sold into the election. Towards the longer horizons (34 to 89 days) – I call this the investor horizon – the indicators are somewhat balanced. I read this as investors are balanced.
This contrast between traders and investors indicates potential for downside as election results come in as investors may choose to adjust positioning.
