From Chief Investment Officer Tom Veale,
“Another week of apparent chaos on the trading floor has passed – but maybe it was just more sorting out. Advancing stocks actually outnumbered decliners by a substantial margin. An anemic number of new 52 week highs suggests we still don’t have much speculation – an opinion confirmed by SignalPoint’s Speculation Index being mildly optimistic right now. Overall, our Market Risk Indicator stayed flat for the week at slightly higher than median value.
Those investors willing to open their September statements saw there was evidence the bearish market activity had most likely affected their net worth. So far, October hasn’t shown much change in behavior. This week will offer a view of key inflation data and whether the Federal Reserve’s activity is starting to show encouraging results. It would appear so far that inflation has slowed its rise and has flattened out.
We continue to have our Relative Valuation and Speculation Indexes in opposition. Valuations remain statistically high while speculation is on the low side. Both are more than a full standard deviation away from their median levels but in opposite directions. Our other two MRI components remain solidly neutral right now.
Here’s a look at a typical portfolio of U.S. Stock Sector ETFs and the cash held in reserve for them through the end of September, 2022.
With the decline in ETF prices we see the SignalPoint Process slowly shifting cash from the reserves by adding more discounted shares to the various sector ETFs. At this point cash as a percentage of total portfolio value is about the same as it was when we saw the 2020 Covid induced lows. Generally, this sort of realignment is occurring in all of the SignalPoint Strategies. We continue to monitor these strategies looking for opportunities to rebuild share inventories.”
The MRI stayed steady at 29 this week even as all four components rose slightly in risk profile. The MRI Oscillator rose to minus 2 this week indicating only slight downward risk pressure compared to a week ago.