In the Outlook for 2016, we highlight some areas where uncertainty or important changes may lead to opportunities as the year progresses, such as interest rates, energy, and emerging markets. For each of these areas, as well as for the volatile market environment as a whole, we share an overview of our playbook for added flexibility in 2016. Running through all of these playbooks are some basic themes:
- Patient doesn’t have to mean passive. Stay with your plan, but there
may still be times when it makes sense to lower a portfolio’s riskiness.
- Protect but don’t panic. Some protection can create flexibility.
– Pursue opportunities. Flexibility creates room to pursue opportunities.
With this more tactical approach, technical analysis can be a more important tool for gauging market behavior and can be useful both to help mitigate risks and take advantage of opportunities. Technicals have always been part of our process in analyzing market behavior. In more volatile markets, where fear can create sustained gaps between what’s going on in the markets and what’s going on in the economy and corporate America, the ability to measure market sentiment through technicals can become even more important.