Conceptually, “a bias”, according to Merriam-Webster Dictionary, is a tendency or trend. However, when defining primary and secondary events, we would use another definition that describes “bias” as “the impulse” that’s causing the tendency and trend.
In the “QAS Risk Zones Methodology” we apply the “bias” concept to define the most sensitive initial impulses within the most uncertain (or what we call “low conviction”) neutral market condition segment.
According to our long term analysis of the S&P 500 Index®, the stock market spends over 70% of the time in the neutral zone (per QAS definition). Therefore, a) recognizing neutral zones and b) capturing negative and positive impulses within neutral zones have become two of the most important parts of our research.
Using the “QAS Risk Framework” for all major US-listed ETFs, the QAS ETF Strategist tool enumerates the current measured risk zone, including Zones 6+ and 6- which represent the “Neutral, Positive Bias” and “Neutral, Negative Bias” Zones, respectively.
Most recently, it was interesting to observe how all major REIT ETFs that have been mostly in the positive territory all of 2014, one by one, have triggered a “Neutral, Negative Bias” risk level between April 8th and 10th of 2015.
Below is a snapshot from the QAS ETF Strategist tool as of 04/10/2015. As you can see, across a wide variety of selection and weighting schemes, these REIT ETFs shifted from the low risk, high conviction positive Zone 2 (Positive, Maturing) into the high risk, low conviction Zone 6- (Neutral, Negative Bias).
Source: QAS ETF Strategist Online (http://www.qas-service.com/etf.html)
Considering the fact that last zone, Zone 2 was persistent for several months, the current shift in the REIT segment is important, and could be signaling an initial impulse of further deterioration in the future.
REIT market experts can probably explain the current “negative bias” readings inside this segment, but from an ETF Strategist’s standpoint – REITs are currently one of the sectors that require special attention, and tools like QAS ETF Strategist Online provide you with necessary alert information that the risk is increasing and further price deterioration is possible.
The “QAS ETF Strategist Online” service provide institutional users with independent and actionable daily risk/reward research on 800+ US-listed ETFs and a variety of search options: “by symbol”, “by country/region”, “by area of interest”, “by asset class” and more.
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