From Chief Investment Officer Tom Veale,
The unfortunate aspect of a rebound like we’ve seen from the late September low is that sometimes it happens too quickly. In this case, the SignalPoint Relative Valuation Index has risen with the Price to Earnings average, moving up to 16.6 this week. This alone isn’t indicative of trouble, but when added to the 5.4% interest rate on the short Treasury it’s enough to move Relative Valuation back into its cautious territory.
That plus modest rise in our Speculation Index were enough to raise the Market Risk Indicator another point this week. It would appear a bit of consolidation might be in order from here through the end of the calendar year.
Recent weeks have had the 13 Week Treasury rate in a tight range while the 10 Year coupon has declined now to 4.2%. There is now about 1 full point showing between the short Treasury and the CPI Inflation rate.
This is around the average, historically and can be considered healthy. The fly in this soup is that the overall yield curve is still inverted.
Currently only the Energy Sector is trading below its 26 week Moving Average price. All the other U.S. sectors are at or above that benchmark. We’re carefully monitoring levels of reserve cash for each position and adjusting when market prices reach our targets.
Best regards,
Tom Veale
The MRI comes in at 27 this week, one point up and slightly above its Median value. The MRI Oscillator is +4 indicating continuing upward risk pressure. Two components of the MRI are neutral with one showing caution and one in its proactive range. Overall, these components cancel out to give us an overall neutral ranking.
