Market Risk Report as of June 20, 2022

From Chief Investment Officer Tom Veale,

Markets had another rather bad week while I was away. I guess I shouldn’t do that anymore. Courtesy of Franklin/Templeton we see the following:

As you can see, there is a lot of red ink in that report. Can there be anything good in any of this? My brother used to talk about “Strong hands vs Weak hands” and with enough bad days the weak hands will start to give up. Capitulation is what we seek but have we seen enough weak hands leave yet? 
 
The SignalPoint Market Risk Indicator still thinks valuations are a bit too high yet. They are getting better and are nearing being fairly valued. Here’s the overview:
It appears the dropping risk trend is still taking place. Market risk now is less than at the start of 2022. That’s the best take away we can see right now. Two of the MRI components are neutral, one is slightly above neutral and one is below. Value Line’s P/E is down to 15.4, the best it’s been in a long time. If it weren’t for rising interest rates and inflation pressure that P/E would look quite good.
 
The SignalPoint Process has shifted into its accumulation mode and we’re seeing more components of our portfolios calling for share additions. With adequate reserves of cash we endeavor to satisfy the purchase of additional shares as prices decline.
 
Best regards,
Tom Veale
 
The MRI comes in at 30 this week, down one point from last week. The MRI Oscillator has moved to a minus 4 indicating relatively strong downward risk pressure. Should the markets continue in the current direction we should see all four components at or below their own neutral ranks.

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