The Nasdaq failed to match its July high while the S&P hit new highs and has formed a pattern we will monitor closely. US equities, while still within the Green Light conditions on our risk zone, are weakening.

The Risk Rating

Looking at the S&P 500 index since 1950, we have discovered key insights:

Red Light Conditions:

• Red light conditions have existed only about 15% of the time since 1950. However, that 15% of the time accounted for only 1% of the stock market's gains

• 99% of market return since 1950 occurred when the S&P was not in Red Light conditions.

• Virtually every major market correction (including 1987, 1989, 1998, the Dotcom Bust starting in 2000, and the Financial Crisis starting in 2008) occurred after conditions changed from Yellow Light to Red Light conditions.

Having a plan is key to properly managing any situation. We know that no indicator is perfect, past performance doesn’t mean Jack and no strategy guarantees a profit or prevention from loss. A mathematical risk rating helps balance risk by creating a critical exit point for down markets. Our 3-Rules of Investing are:

1. Have a Plan for Up Markets

2. Have a Plan for Down Markets

3. Have a Clear Way to Tell the Difference