The headlines would read: “A teenage female going by the name of Gold E. Locks is being sought for questioning related to criminal trespass and food contamination. Upon returning home from a trip, the property owners discovered the assailant sleeping in a bed, and then she committed criminal flight to avoid prosecution. Please contact law enforcement with any information on her whereabouts.”

Now, as Ms. Locks can testify under oath, some things will fall into three categories…
Too Hot, Too Cold, and Just Right. And similar to her Modus Operandi, I begin my day by assessing the temperature of the financial markets with the hope of avoiding unpleasant surprises. Fortunately, there are various indicators that can provide some good insight into pending market actions, one of which is the OBOS indicator (Over-Bought – Over-Sold).

OBOS measures the current price of an investment versus its average price over a recent time period. The higher the current price is above the average, the more it’s considered to be ‘over-bought’. Conversely, the lower the current price below the average, the more ‘over-sold’ it is. In either case, there is an increased probability (but no guarantee) that the investment will move back toward the average in the short term. So the OBOS indicator helps identify investments that may be too hot (over-bought) and that may drop in price, and those that are too cold (over-sold) and may provide some upside potential.
So there are lots of temperature gauges for
the market, but the data may require some
interpretation. As a Fundamental Choice
Portfolio Manager with Wells Fargo Advisors,
I created the Flexible Growth Portfolios (FGP) for clients who may be frustrated with the fluctuating temperature of the market. FGP consists of four different portfolios to accommodate different levels of tolerance for market risk: Conservative, Balanced, Moderate and Growth.

Because of their operational structure, the four portfolios may prove less expensive than your
current investment strategy. And each is managed with a very systematic 3-step methodology that is proprietary to FGP:

Adjust the investment allocation*
based upon the market conditions.

Focus on areas of the financial
markets that are ‘in-favor’.

Utilize a ‘Sell Strategy’ to minimize
the chance for large losses.

So if you’re concerned about your investments being too hot or too cold, perhaps you need to ‘Explore Your Options’ with an in-depth explanation about FGP.

The Week is a Market and Econmic commentary published by Wells Fargo Advisors on a weekly basis. If you would like to receive a sample copy for review, or if you would like to discuss your
situation by phone or in person, contact Jerry Goodman at 865-560-2610
(toll free 800-537-9889) or by email at
jerry.goodman@wfadvisors.com.