Market Risk Report as of December 19, 2022

From Chief Investment Advisor Tom Veale,

It would appear that short term trading tactics when profitable need to be offset with short term trading losses as we near the end of the 2022 tax year. The ‘bad’ get worse and the ‘good’ get better as money shifts to capture losses and relocate proceeds into perceived future winners.

SignalPoint’s Market Risk Indicator has been cautious in recent weeks with the divergent activity seen in the major stock indexes. Further, stock valuations have remained stubbornly rich in the face of rising short term interest rates and inflation.
Some market soothsayers feel we’re just at the start of a swoon similar to that which occurred in 2008. Others look at current earnings and general business and find comfort in how things are going. We see risk today as being less than the start of 2022 with the Market Risk Indicator almost 10% lower now. That is with the NASADQ Composite now almost 30% below a year ago, the S&P 500 down 17% and the Dow 30 off around 7%.
We continue to deploy our reserves of cash toward equity ETF inventory accumulation where discounts justify such. This has been a sector specific review and activity so far. Healthcare, Industrials and Consumer Staples remain the strongest sectors in the U.S. Domestic markets. Real Estate, Communication Services and Consumer Discretionary sectors remain the furthest from their inventory reduction targets.
Best regards,
Tom Veale
The MRI comes in at 34 again this week with a modest +2 for the MRI Oscillator. Equal components were up and down for the last week keeping the overall MRI steady. Two remain cautionary while two are neutral.

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