Key Reversal Indicator Update – Getting Critical

February 18, 2014

When we look at the recent rise for equities, we want to know how that move is occurring. If it is “too fast” then there may be a need for the market to cool off a bit before the next leg higher.

Then again, perhaps the move was simply a bounce off of lows that will reverse. Either way, the Key Reversal Indicator tells us that markets are getting frothy again and the likelihood of a reversal within the next couple of days is increasing. Currently, the KRI is at a +4 level. Above this is critical as history has shown us that when the levels is above +4 or below -4 that a change of direction is forthcoming.

Market Moderately Overheated

The overall market, as measured by the KRI algorithm, is nearing a critical level of being overheated.

Caution on the long side should be observed as a reversal of trend may be nearing. Continue to evaluate long positions, tighten stops and consider reducing long exposure or hedge out risk over the near term.


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“Not That It Matters” – However, Spearman and KRI Are Talking

March 15, 2013

If you were wondering if the markets are getting overheated, the answer is YES. A reading of “3” on the Key Reversal Indicator (KRI) is indicative that there needs to be a reversion sometime in the near future. Over the past several months, there have only been a handful of times that the level has reached 3 and even fewer that have approached 4.

While markets can continue to move higher, there is often a corrective action that will follow a 3 or 4 reading for this indicator. We have Read more