The Yellow traffic light is very important. It indicates a possible change from “GO” to “STOP”, and unlike the Green and Red lights, Yellow has a shorter life span.
The Heat Map format in QAS ETF Strategist Online was designed the same way. The top 100 most liquid ETFs across all asset classes make up a 10x10 grid, and they change colors from Green (Positive) to Yellow (Transitional Biases), and to Red (Negative) to serve as a quick daily market snapshot. This is why this feature is very popular amongst users of the tool.
It is interesting to observe various periods of time when sometimes the majority of the markets turn Red or Green, or when there are mixed signals (especially within a particular asset class).
Yesterday, after the October 12 data came in, we found that our ETF “Heat Map” turned “Yellow” in 52 out of 100 instruments. This is a very unusual “transitional sentiment” after a very “mixed” picture we observed during the summer time. The Heat Map has been turning more and more “Yellow” in the first half of October.
As you can see, there are currently no Red signals on the Heat Map (see below). However, the “quick” nature of the Yellow signal (Negative Bias indicator in QAS methodology) suggests that there is a good chance that the markets can transition into a more negative market period very soon. This is one of those times when we advise users to review the changes in our “highly sensitive” online tools on a daily basis, because the Yellow Light is short lived and we can quickly end up facing a “STOP” signal.