Risk Report 08/18/2008
This is a double report this week. While both the smaller and larger cap i-Wave are showing Low Risk levels, the last two weeks have seen a rise in their values
The week of 08/11 seems to be the turning point for this latest very low risk period.
We continue to ignore the 'noise' coming from the Zeal component because of the change BARRONS has made in the presentation of their data. However, the way we've smoothed the data, it should start to normalize over the next few weeks. Assuming it was consistent the last month or so, we would be seeing the IW on the Low Risk - Neutral line right now.
Relative Valuation for both the smaller and larger caps remains bullish while all the other components are neutral. Speculation remains controlled but the Divergence component seems to show a buildup of worry - possibly pre-Democratic Convention jidders.
So, while all remains "low risk" (do the clients feel it's low risk?) we are starting to see some early concerns. P/Es have started to rise, either because of the market's stealth recovery or because earnings reports are off a bit. Interest rates as measured by the 13 week Treasuries shows an expectation of a FED bump in their Funds rate. While still bullish, it is a continued slight risk in risk for the last 4 weeks.
