Financial Research - Asymmetrical Risk/Reward
The Boom & Bust Signal is an indicator developed by David Brown and Professor Nouriel Roubini based on both fundamental and statistical analysis that has been applied to different asset classes to measure the possibility of a market correction.
It is a Digital Signal (Buy/Sell), easy to read, that indicates when one asset class is Overbought (Red BOOM), and it is time to reduce the exposure to that asset class, or Oversold (Green BUST), and it is time to increase exposure to the same asset class.
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Type: APPS BOOM <GO>
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The Boom & Bust Signal brings to everyone in a simple format, and at a reasonable price a sophisticated analysis used by banks and hedge funds.
The Boom signal can be also Orange or the Bust signal can be Blue to indicate that the asset class in question has started to become overbought or oversold, and the chances of a market correction have increased, but are not as high as with a Red or Green sign.
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RED BOOM: Probability of a Down Correction HIGH
ORANGE BOOM: Probability of a Down Correction Medium
BLUE BUST: Probability for a Recovery Medium
GREEN BUST: Probability for a Recovery HIGH
Compared to other overbought or oversold indicators The Boom Bust Signal is more accurate when the signal is issued (Higher probability of a market correction), although the indicator is issued less frequently than other market indicators as The Boom Bust looks at extreme overbought or oversold situations.This mean that it is possible to have a market correction in one of the asset classes without The Boom & Bust flashing Red or Green, but when the indicator is showing a Red Boom or a Green Bust the probability of a correction is very high.For example with reference to the S&P Index The Boom Bust Signal has predicted 5 of the past 7 market corrections (Over 10%).