Market Risk Report as of July 4, 2023

From Chief Investment Officer Tom Veale,

Thinking about Risk this day I was taken by the thought of the American Colonies and their decision to break free of England and declare their independence in 1776. What risk was there is ‘doing nothing’ compared to challenging Britania for the right to self-governance? What level of intrusiveness had England imposed on the subjects living in the Colonies that they were willing to risk everything for independence?

The small nudge upward in risk this week for SignalPoint’s Market Risk Indicator (MRI) seems somewhat trivial by comparison. This week we have two components drifting upward while two drift downward. It was our Divergence Index (which measures investor consensus) that moved upward enough to push the MRI up a notch.

Only one component is currently in its neutral territory while two are showing caution and one shows very low risk. The Summer season can be confusing like this. After 2022, few expected 2023 to be as bullish as it has been. The S&P 500 has managed a 14% rise since the start of the new year. All three major stock indexes have moved nicely upward. Of note is that the SignalPoint MRI is almost the same risk level (now one point lower) as was seen at the start of the year. Does this mean the second half will produce similar results? Unfortunately, that’s not how the MRI works. It suggests currently that the risk in the market is a bit above its long Median value.

The other part of what we do at SignalPoint is to follow a process that gives us a feel for where in the market there is either profitable excess or above average opportunity. On both sides we work to adjust position inventory.

Happy Independence Day,

Tom Veale

The MRI comes in at 31 this week, up another point. The MRI Oscillator shows a +3 showing a bit less upward risk pressure.

Share Article: