Looking For Risk-On Signals
Mr. Market doesn’t explain himself, but he does drop clues about preferences. Interpretation is mostly art, but it can be worthwhile when there are clear signs of trend changes. One approach for monitoring such events is comparing ETF pairs.
Let’s start with the big picture via a set of aggressive (AOA) and conservative (AOK) asset allocation ETFs. Based on data through yesterday’s close (Jan. 10), this pair suggests that the risk-off bias rolls on, although there are hints that a consolidation phase is replacing a bear-market phase, which may be a set-up for a return to risk-on in the near future.