From Chief Investment Officer Tom Veale,
“Our Market Risk Indicator is working overtime to filter the noise out of the market’s data signal. Generally the stock market is doing pretty well even while dealing with Coronavirus and Presidential Elections. Market Indexes were up modestly last week and now show break even or better returns on a Year To Date basis. Year Over Year results are in positive double digits. With that as background SignalPoint’s Market Risk Indicator remains unchanged this week at 35 giving us the 4th week of a bearish signal. The MRI Oscillator shows a +4 indicating moderate upward pressure on risk.”
“Three MRI components rose slightly in their own ranges with two bearish and one bullish. Valuations remain fully priced. Our Speculation component indicates heavy betting on the economy’s best performers while investors continue to ignore the less fortunate company stocks. The Divergence Index remains bullish indicating a high level of investor consensus even as headlines seem distracting.
Portfolio management activity continues to be primarily on the Sell side as the SignalPoint Process looks to capture profit and secure gains as cash for the future. We continue to monitor our positions seeking both near and long term opportunities.”
The Market Risk Indicator is an assessment tool that serves as a guide through all markets as to the prudent use of a liquid cash cushion. It helps determine an approximation of the amount of cash reserve relative to a diversified equity portfolio. (this is depicted by the graph above)
At times of high risk in the market, the MRI will suggest a higher level of cash reserve. At times of low market risk, the MRI will suggest a lower level of cash reserve. This investment process helps to measure and manage market risk.
Because of this, the fear associated with the uncertainty of the market can be replaced by the security of a sound investment strategy.