Market Risk Report as of August 1, 2022

Tom Veale
August 1, 2022

From Chief Investment Officer Tom Veale,

Last week’s market activity helped close July on a positive note. Our Signal 10 Strategy with ETF assets representing the major business sectors rose nicely. While not back to previous highs recorded last year it might indicate the markets have found a near term bottom.

As can be seen, the cash reserve level was drawn down through inventory additions during this recent decline. Similar results can be seen with SignalPoint’s other investment strategies.

The SignalPoint Market Risk Indicator (MRI) displays the late July rally with slightly different light. Three of the four MRI components rose in their own risk ranges. This had the effect of lifting the MRI back to its Median level.

The uptick in the markets has not been accompanied by a similar move upward in earnings, hence the Price/Earnings ratio rose right along with stock prices. We have been watching earnings reports very closely and while not “bad” they show no strong growth, in general. This suggests limits on upside potential right now.

In just three weeks we’ve seen the 13 Week Treasury Coupon rate rise from under 2%/yr to over 2.5%/yr. The rate started 2022 at 0.076% so has risen dramatically in just 8 months. While not great news for borrowers it should offer some relief for savers.

Best regards,
Tom Veale

The MRI comes in one point up from a week ago at 26. The MRI Oscillator rose to +5 indicating significant upward risk pressure with three of the four MRI components rising in risk.

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