My RORO Risk Range Summary, which includes 19 Risk-On versus Risk-Off ratios, has shifted to slightly favor risk-off assets.
Here is the chart:
(right-click and open image in new tab to zoom in)
Let's first break down what the chart shows:
This RORO Risk Range Summary compares the current trading ratios of 19 risk pairs to their 52-week range, represented by blackdiamonds, and their range position from one month ago, shown as graytriangles. The right side indicates Risk-On, while the left side indicates Risk-Off.
The Takeaway: When evaluating Risk-On versus Risk-Off ratios, I find the weight of the evidence approach to be very useful.
In my RORO Risk Range Summary, the risk pair comparisons indicate a slight tilt toward Risk-Off assets over the past month. For 11 out of 19 pairs, the ratios are closer to their Risk-Off component, suggesting a weakening risk appetite.
Furthermore, 12 out of the 19 components have weakened over the past month, which does not demonstrate Risk-On leadership or strength.
This intermarket view of risk pairs reinforces the message from my Weight of the Evidence dashboard that argues for caution as conditions are deteriorating.
However, if we begin to see broad and sustainable strength, I expect it will be evident through a decisive move back toward the Risk-On side of the RORO Risk Range Summary.
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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