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1st Quarter, 2014 Commentary

First Quarter 2014 Commentary

After an excellent year in 2013, the markets entered the first quarter of 2014 with a positive attitude, but with less potential for continued generous returns. The market risk as measured by SignalPoint’s Market Risk Indicator (MRI) ended 2013 slightly above the middle of the Neutral range. During the first quarter there was no significant movement in the MRI’s components and the MRI remained neutral indicating a balance between potential gain and loss.

All of SignalPoint’s various investment strategies closed Q1, 2014 with modest gains. Excellent performance by the income oriented portfolios assisted the SignalPoint balanced strategies, while the global oriented equity strategies outpaced US equity strategies.

Trades generated by the SignalPoint Process continued mostly on the Sell side but were limited to only a few business sectors. The few Buys that occurred were in the sectors representing Latin America and Emerging Markets. Overall the first quarter was relatively quiet and the large increase in cash reserve levels seen during the previous year tapered off during the first quarter.

An increase in Initial Public Offering (IPO) activity during the first quarter (2014) had the effect of siphoning off some of the more speculative investor money. Having those dollars directed at IPOs tends to dampen upward momentum in the more traditional areas of the marketplace. Thus at the quarter’s close the major U.S. and broader international stock indices were up modestly.

Most of the ETFs used in SignalPoint’s various stock and income strategies closed the first quarter at or above their 26 Week Moving Average Price. It appears the previous year’s bullishness may be continuing; however, the very short term trends at the end of March also saw some sector rotation into areas investors tend to believe are more defensive. As of the close of the quarter all domestic sectors held adequate reserves of cash should market direction change. Other than Emerging Markets and Latin America ETFs the international ETF components have reasonable reserves of cash on hand. The Latin America and Emerging Markets ETFs redeployed significant amounts of their cash reserves.

As the second quarter of 2014 unfolds the strong defensive posture as measured by the level of cash reserves of the SignalPoint equity strategies will provide some relief if market sentiment turns negative. Meanwhile, ample equity exposure remains if positive momentum returns to the stock market. Our income strategies are also defensively positioned with healthy reserves of cash should the bond market experience a downward trend similar to a year ago.

Thank you for your continued confidence and support.

Thomas M. Veale

Chief Investment Officer

SignalPoint Asset Management, LLC
Office Hours: 8:00 am—4:30 pm Monday—Friday
1201 E. Walnut Street, Springfield, MO 65802
Phone: 877.769.9980