Market Risk Report as of July 24, 2023

From Chief Investment Officer Tom Veale,

If we were to compare the daily weather reports to the daily stock market indexes we’d think there is more to worry about with the weather. While SignalPoint’s Market Risk Indicator isn’t particularly worrisome at this point, it isn’t as relaxed as a summer picnic, either. Most of the MRI’s components are median risk or lower, but we find the MRI’s Relative Valuation component stubbornly arguing that this isn’t an inexpensive market in which to invest.

Even so, the summer of 2023 has been good for investors as has most all of the year so far. This week the MRI remains unchanged even as the individual components rose slightly in risk profile. Stock prices have risen on pace with  earnings through much of 2023 so far. That has kept the Relative Valuation component steady, even if a bit higher than we’d like to see.

The 13 Week Treasury coupon rate remained unchanged through last Friday. The FED is expected to possibly bump the shorter term rate to the upside this week in its continuing battle to control inflation while not damaging economic activity. That’s not an easy job.

Investor enthusiasm shows up in a slow risk in our Speculation Index but it is still modest through last week. An exception is Carvana (CVNA) which has risen over 300% in the latest 13 weeks. Carvana’s was everyone’s favorite short sale a year ago as it struggled to remain solvent. Now it has been at the top of the “Best Performers” list in Value Line for 5 weeks straight, rising 44% over this most recent stretch. It currently takes a 43% rise to make Value Line’s “Best” list and only a 22% decline over the latest 13 weeks to make their “Worst” list. This shows a modest bias toward investor speculation but remains generally neutral.

We continue to monitor the Strategies’ reserves and component price action for opportunities.

Best wishes,

Tom Veale

The MRI this week remains at 31 while the MRI Oscillator shows a bit more upward risk pressure with a +3 reading. Three components are neutral or lower and just one is cautious at this time.

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