Market Risk Report as of July 25, 2022

From Chief Investment Officer Tom Veale,

Last week provided a relief for those who watch the markets closely.

There was more Green showing for the weekly data than in a while. This happened even as the investment media continues to discuss fear of recession. Should we see the economy slow and drop into recession at least the stock market will already be discounted nicely when it starts. This week’s Market Risk Indicator remained unchanged as we see the S&P 500 flattening out.
We’ve seen speculative money take a rest and move to the sidelines as seen in our Speculation Index. This is generally a bullish sign as that category of money usually moves too much, too fast. New Highs for the last year are a statistically small number right now indicating strong consensus among investors. This, too, is a short term bullish bit of info. Advancing stocks are starting to outnumber decliners on a weekly basis after poor market breadth for the last month.
 
Schwab reports somewhat larger investor cash levels but not any where near what was seen in other market pull backs. With slightly improved money market rates some investors have chosen to sideline cash rather than remain ‘long’ in the markets. Looking at the New Issues markets we see a return to normal levels of IPOs and mergers for no net gain in total issues traded right now. After the ‘silly season’ of the previous two years this is a relief.
 
Moving along with the markets we continue to watch for opportunities to expand our share inventories in the weaker market sectors as deeper discounts appear.
 
Best regards,
Tom Veale
 
Our Market Risk Indicator remains at 25 this week with an Oscillator value of zero. For now it appears risk is steadying near its Median value. One component is bullish, one bearish (Relative Valuation) and the other two are neutral this week.
 

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