Since my February 13th newsletter flagged rising market volatility, market risk has been at the amber level, with 21-day Twiggs Volatility fluctuating between 1.0 and 2.0 percent on the S&P 500. A large trough that respects the 1.0 percent level, as in 2015 below, would be sufficient warning to cut back exposure to stocks because of elevated risk.
Yesterday, Volatility (Twiggs 21-Day) on the S&P 500 retreated below 1.0 percent, suggesting a return to the lower-risk green zone. Breakout above 2800 would signal reviving investor confidence, and an advance to test 3000.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.