For the second week in a row our Equity Risk Index ticked higher.  This time one of our breadth signals turned bullish.  While using our risk indexes it is important to look at the level as well as direction.  As you can see in the chart below it has been steadily climbing but is still only at 38.89% bullish.  On a scale of 1 to 100% 38.89% is nothing to get too bullish over.  What a rising risk index does tell us is that we should be looking at the long side more and more.  But it does not mean we should be loading the boat.  Basically as with anything the risk index is a tool and not a crystal ball.

The market has rallied quite in a bit in the last two months and may be at the end of its bear market rally. Short term we have changed from bullish to neutral and would not be surprised to see the market break either way. So what do we do? We have been doing the same thing we always do, simply look for good risk to reward opportunities and size our positions accordingly.

Happy Trading,
The Macro Trader
Dave@TheMacroTrader.com

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