The UIS Risk Rating is designed to assess the S&P500 Index, so it works best with anything that tracks the S&P500 directly.
S&P500 Trading Options
SPY ETF
The most direct way to track the S&P500 with the UIS Risk Rating.
SPX Options
Note: time value losses can hurt long-term trades.
ES and MES e-mini Futures
Liquid futures contracts for active trading and hedging.
Any of the 500 Companies
Individual S&P500 constituent stocks in the index.
Leveraged S&P500 ETFs
SSO
2x leverage of the S&P500.
SPXL
3x leverage of the S&P500.
Can You Use It for Other US Indices?
Yes. The UIS Risk Rating can be applied to other indices and ETFs that closely follow the S&P500, including:
- The Dow Jones Index and its ETFs
- The Nasdaq Index and its ETFs
- The Russell Index and its ETFs
- Other indices and ETFs that cover US stocks
Can You Use It for Overseas Markets?
Yes, but only to a limited extent. Its main use for international markets is as a Bear crash warning.
S&P500 falls ALWAYS cause an immediate fall in major overseas markets, usually by a larger amount. So when the UIS Risk Rating signals a Bear fall in the next month, it applies to all major international markets as well.
However, local markets can also fall for their own reasons, such as local economic problems, government policies that hurt business, or big interest rate rises. These falls may not happen anywhere else. A positive UIS Risk Rating for the S&P500 does NOT mean your local market will also rally. A positive US outlook is good news, but local economic conditions and business policies decide where your local market goes.
How Reliable Is the UIS Risk Rating?
The UIS Risk Rating is based on analysis of the 500 companies in the S&P500 Index, each of which releases earnings estimates up to 12 months ahead. UIS research has shown that:
- Companies' earnings estimates are slightly lower than the actual earnings they report after each quarter. Companies underestimate slightly to be conservative, because they don't want to report results worse than their estimates and damage management credibility.
- The UIS Risk Rating has consistently flagged every Bear crash in the last 30 years, with at least one month's warning.
Will It Keep Working as Markets Change?
Markets change, but they are somewhat cyclic, with Bull and Bear markets driven by economic and other conditions.
Our earnings research goes back over 100 years, and the UIS Risk Rating has been rigorously tested over the last 30. In that time, the US share market has been through several Bull trends, Big Bear crashes and smaller Bear crashes, as well as wars and every kind of economic condition, and the UIS Risk Rating has delivered consistent results throughout.
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Sample UIS Risk Rating Report