Weekly Risk Report 08/20/2009
It would appear that there’s more action in the market place if one were focused on the day to day moves and news with no longer term outlook. As dipicted below, all three major indicies are moving essentially in harmony with little differentiation between larger and smaller cap stocks. The NASDAQ Composite suffered a bit more indignity in the last week than the S&P500 and the Dow 30, however it also had moved upward to a greater degree than the other two indicies since the lows of March.
The Market opens on Monday and Wednesday weren’t pretty, but Tuesday and later on Wednesday we saw a mild return from the early weakness. So for all the “news” we see, the major markets have only moved between 1% and 2% to the downside. While CNBC may consider this "newsworthy", our SignalPoint process has been unmoved by this shorter term movement and has seen no need for activity.
Our market risk model has been hovering at or near the border between Neutral and Low Risk for several weeks now (approx 90% of the data since 1982 being more bearish than now). This week it crosses the threshold once again to Low Risk for longer term market commitments. Relative Valuation improved with a small drop in P/E while Speculation moderated. Divergence remains very bullish and Zeal remains neutral to bullish. Overall indicated cash reserve level remain historcally very low. Our portfolios remain adequately funded with cash for the indicated risk level.
Best regards,
Tom Veale
