Reality Shares Market Strength Guard Indicator Signals Shift Toward Positive Market
May 17, 2016
The Realty Shares Guard Indicator, a proprietary system designed to measure overall market strength, recently shifted to indicate a positive market environment. After 232 days in the red, this shift towards strong markets could bode well for investors.
As of May 6, 2016.
The Energy sector played a key role in the upswing as its Guard Score became positive this week as well. It is now the eighth S&P sector with a positive Guard Score. The Guard Indicator calculates Guard Scores for each of the ten S&P 500 sectors by factoring in downside deviation, price momentum and volatility. When eight or more of the sectors have a positive Guard Score, the Guard Indicator forecasts a broad market upswing. When seven or fewer of the sectors however have positive Guard Score, the Guard Indicator points toward possible market weakness.
One ETF, the Reality Shares DIVCON Dividend Guard ETF (Ticker: GARD), utilizes the Guard Indicator to time a dynamic short component. The GARD ETF removed its short hedge on May 6, 2016, and is now long-only in the healthiest dividend paying companies on the market (as determined by the DIVCON dividend health rating system).
The GARD ETF attempts to dynamically and systematically predict future dividend changes and overall market health using DIVCON, a proprietary forward-looking dividend growth-related rating system. It evaluates seven company health indicators rather than looking at past dividend changes. The ETF invests in the large-cap companies most likely to increase their dividend based on the highest DIVCON scores. When the Guard Indicator predicts a market downturn, the ETF dynamically reduces long exposure to 50% while adding a 50% short position in the lowest DIVCON-rated companies – those most likely to cut dividends.
The GARD ETF seeks to systematically break down the building blocks behind some of the best actively managed funds and helps provide institutional-quality security selection and risk budgeting – offering a potentially attractive and intelligent investment product for dividend growth ETF investors.
For more information and a copy of the Funds’ prospectuses, please click here or call (855) 595-0240.
The models used in the GUARD indicator may be incomplete, flawed or based on inaccurate assumptions.