Market Risk Report as of July 18, 2022

From Chief Investment Officer Tom Veale,

What do the MRI ‘tea leaves’ suggest this week? “Better than Median” appreciation potential looking out 6 months or so.

We see the S&P500 Index flattening out even as the MRI continues its trend to lower market risk. We have low market speculation and investor consensus is still strongly “away” from putting new money into stocks. This is a contrary Bullish signal. My personal investing motto has been, Buy from the Scared, Sell to the Greedy for decades. Current investor sentiment suggests the Scared outnumber the Greedy.
 
Here’s Franklin-Templeton’s look at last week’s markets:

We note this week the U.S. 13 Week Treasury Coupon Rate is now above 2%/yr yield (2.151%). This should help the beleaguered Money Market Funds moving forward. This yield is now competitive with Value Line’s median dividend yield (2.2%/yr) for the first time since mid-2019. While still well short of meeting current inflation, it is a significant improvement for holders of cash.

In the meantime we continue to look for opportunities to deploy our Strategies’ cash reserves to build ETF share inventories in those sectors mistreated the greatest by the markets. These seeds should offer good harvests in the future.

Best regards,

Tom Veale

Two MRI components remain bullish while Relative Valuation is still stubbornly bearish. IPO/New Issues is neutral right now. The MRI comes in down one point at 25, the lowest level since mid-2020 when the S&P500 was at 3041 (post-Covid rally had started).  The MRI Oscillator is currently minus one, indicating the flattening of market risk at this time. The “25” MRI reading is one point below its median value.

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