Before you decide to participate in the market, you should first anticipate. Influenced by trading patterns and cycles that are relatively predictable by nature, and when we understand these things better, we can thoughtfully react to unexpected developments in the market as well as headline noise.
Leaving your emotions at the door, following the models and looking at the math is an attitude that I feel perfectly relates to the way our investments team decides where to apportion capital.
U.S. Global Sentiment Indicator at U.S. Global Investors is one of the tools we feel is highly useful when it comes to tracking different market cycles.
At U.S. Global Investors, one tool that we find particularly useful to track the different market cycles is our U.S. Global Sentiment Indicator. This indicator tracks 126 commodities, indices, sectors, currencies and international markets to help monitor volatility and cash flow levels.
You can note what percentage of positions with 5-day moving averages either below or above the 20-day moving averages. Afterwards, it is compared to the S&P Index.
The U.S. Global Sentiment Indicator: 54% Reached Mid-Week
The market happens to be enormously oversold if a drop down to under 20% takes place, however, don’t consider the market to be overbought until it hits somewhere around the 80% mark.
Possessing a keen awareness of the movements will ultimately enable your investments teams to have more proactivity instead of reactivity. And, it will also help you to not become swept up into media negativity or headlines that are very optimistic.