Market Risk Report as of July 11, 2022

From Chief Investment Officer Tom Veale,

It’s taken nine weeks of tough market action to see the SignalPoint Market Risk Indicator drop to its Median value.

This week we see it reflecting the cumulative damage to the S&P500 for the Year To Date. We all knew there was a lot of fluff in the markets at the start of 2022. Three of the four MRI components were in their own bearish territory back in January. This week two are currently showing bullishness (Speculation Index and Divergence Index). The IPO/New Issues Index has washed out and is back to its median level. Only our Relative Valuation Index remains somewhat negative as interest rates climb and inflation continues. We’ll see how Q2 Earnings affects its side of Relative Valuation. If inflation and interest rates remain where they are we’ll need to se the Value Line P/E come down another point (currently 15.6) to get the red flag to stop waiving.
 
All in all, we see that upside potential is in far better balance with downside risk than it was at the start of 2022.
 
Best regards,
Tom Veale
 
The MRI comes in at 26, its Median value this week and down a point from last week. The MRI Oscillator is minus 2 suggesting slight downside risk pressure right now. As a floating target for market risk the MRI suggests we’re in far better shape than 6 months ago (40 in January compared to 26 now). This week the very best performing stock for the last 13 weeks is up just 44%. Compare that to the worst performer being down 84% and you get a solid look at why Speculation has now dropped to its Bullish territory. Money flow has been away from stocks for the last quarter. The speculative tide flows in and out. In January of 2022 the “best” performer was up 107% with the “worst” being down just 57%. Things are different now. Less fluff, more substance.

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