Weekly Risk Report 4/19/2010
Our measurement of market risk has been relatively unchanged so far in April. Moderate risk is seen with above average Speculation and a high P/E. Should earnings continue to be reported on the healthy side, this may keep the markets moving forward.
We have seen continued selling across nearly all business sectors in our Signalpoint portfolios. The main exception has been the Utility sector. While Utilities have risen some recently, we have not seen enough upside movement to justify trimming back our positions yet. On the income side there has been selling in the Real Estate sector, but the remainder of the income components have been in a holding pattern.
The Goldman Sacks fraud case has been occupying a lot of press and television time in the last week. This sort of focus usually has the effect of making investors a bit more cautious. The markets have moved well since the pause in late January, so another round of consolidation may be in order near term. In both the larger and smaller capitalized ends of the market we’re seeing statistically above average levels of speculation. It takes a 56% gain in the last quarter to make the “best performers” list in Value Line, but only a drop of 18% to make the “worst performers” list in Value Line. This sort of imbalance usually doesn’t last. Markets tend to consolidate the gains and to revisit the poorer performers to look for potential value.
The SignalPoint portfolios have held the cash reserve percent in a very tight range for several months. Cash growth has matched portfolio growth keeping the percentage very steady.
