It is fascinating how financial markets moved from risk-off in September to risk-on in October. As shown in the chart below, courtesy of Arthur Hill of StockCharts.com, one can measure investors’ sentiment by comparing the line charts of four ETFs. “The S&P 500 ETF (SPY) and US Oil Fund (USO) rise when risk is ‘on’, while the 20+ year Bond ETF (TLT) and US Dollar Fund (UUP) rise when risk is ‘off’. SPY and USO bottomed and surged as TLT and UUP peaked and plunged,” shows Hill.
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Source: Arthur Hill, StockCharts.com, October 28, 2011.