“The bank CDS spreads are what we look at closely as a good measure of risk,” Wyatt says. “U.S. bank CDS spreads, unlike European banks, are not blowing out. In fact, they’ve improved a great deal since 2009.”
Technology ETFs such as SPDR Select Sector Technology (NYSEArca: XLK) are another barometer of risk appetite in markets. These sector ETFs give top weighting to Apple (NasdaqGS: AAPL) and IBM (NYSE: IBM), two companies that have attractive valuations, Wyatt said in TheStreet report. Technology companies are also set to benefit from a bill passed in Washington last year that allows companies to invest in their own, and then write that off. [Tech ETFs: Are Valuations Running Out of Hand?]
Most of all, it is important to have an investment strategy and stick with it. A strategy based around the 200 day-moving-average is recommended, with a definite exit strategy in place. [An ETF Trend Following Plan for All Seasons]
Tisha Guerrero contributed to this article.