SmartStops Market Risk Report- Week Ending June 04, 2010

Market Risk: Above Normal

It is no surprise, SmartStop risk monitors continue to show above normal risk in the market.  We ended the week with 85% of the 4,000+ covered equities in the above normal risk state.


Percent of covered equities designated by SmartStops to be in an above normal risk state day by day. 

(Equities are considered to be in an above normal state of risk from the first SmartStops exit trigger in a series until a reentry trigger has been hit).

Percent in Above Normal Risk State


Percent of covered equities triggering their Short Term Exit (Risk Alert) day by day.

100 day mean: 2.6%.  This Weeks Average: 5.1%

Daily SmartStops Trigger Percentage

Canary


                   Canary In The Coal Mine




How SmartStops Helps Alert You To Changes In Company Specific Risk


News is continually issued on the companies we own, but only a small fraction of this news significantly impacts the share price.  How do we know when to pay attention?  How do we know if a news event is having a negative impact on our stock or if we are just seeing a normal price swing?  SmartStop QuickAlerts can help warn you when it is time take a closer look.

 

So far this year, we have watched three widely held companies, all industry leaders and part of many investors' long term core holdings, suffer operational issues that have severely impacted their business prospects and share price.  On January 21st, Toyota issues a major recall, on May 1st, Johnson and Johnson issues a recall on Children's Tylenol and other medications, and on April 20th an explosion on the BP oil Platform Deepwater Horizon killed 11 people and initiated the massive oil spill that we are watching in horror today.  In each of these instances, as the market began to digest the news and additional information was forthcoming, the shares began to trade abnormally.  SmartStops detected this abnormal price movement and in each case issued a QuickAlert in the first few days of the crisis before the equity had lost significant value.


Companies Experiencing Crisis

SmartStops Risk Alerts are often one of the first signs that a recent event is having a negative impact on a company's share price.  For the most part, long term investors don't have to be watching their equities too closely each and every day.  But if you receive a SmartStops Risk Alert, this is the day you should take a look at that one.  Ask yourself, why is the equity trading abnormally?  What news or event has occurred?  Is it truly impactful or is it a red herring?  Have the fundamentals and / or the company's prospects changed?  Be alerted, educate yourself, and take protective action accordingly.


Happy Investing


Your SmartStops.net Team


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SmartStops.net is dedicated to helping investors be more aware of changes to their risk exposure enabling timely protective action. Buying decisions are made on a risk / reward basis.  Unfortunately, risk does not remain constant.  SmartStops provides effective, easy-to-implement risk monitoring and alert services for individual investors and investment professionals helping them limit losses, improve returns and achieve their investment goals. 

For more information on how to leverage SmartStops to achieve your investment goals, visit us at http://www.smartstops.net


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