Market Risk Report as of January 17, 2023

From Chief Investment Officer Tom Veale,

When the 2022 Tax Selling Season ended, market participants seemed to need new homes for their investing dollars. Not interested in shelter with cash, they seem to feel medium term bonds are the place to wait. The 10 Year Treasury Coupon Rate is stated to be 4.125%/Yr but they are being purchased at a premium, giving the bonds an effective yield of around 3.5%/Yr. One way of looking at this shows bond buyers are paying almost an 18% premium for those bonds.

SignalPoint’s Market Risk Indicator continues to trend modestly downward even with some speculative push and valuations which don’t appear to be a bargain right now.

The year end dip in the S&P 500 was shallower than the two previous false bottoms. New 52 Week Highs are starting to build as New Lows decline. Market Breadth looks healthier than in quite a while as advancing stocks outnumbered decliners last week by a very large margin.
So, technically, it appears some things are improving. Inflation is flattening out in recent months giving Short Term Interest Rates a chance to catch up. Price to Earnings have risen with the improved markets but the indexes probably won’t lift much higher under the current environment. Q4 – 2022 earnings will be something that is discussed quite a bit over the next few weeks. Good news should help the markets but many investors are “forward looking” right now and are more concerned about future earnings.
 
Best regards,
Tom Veale
 
SignalPoint’s Market Risk Indicator dropped another point to 30 this week with the MRI Oscillator showing just +2 (low upward risk pressure). Our Relative Valuation Index along with the Speculation Index both rose with last week’s trading. The Divergence Index fell to near its bullish threshold and our IPO/New Issues Index declined to an even stronger bullish level.

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