Market Risk Report as of June 22, 2020

From Chief Investment Officer Tom Veale,
“Markets rose slightly last week by Friday’s close while trading was confused. The SignalPoint Market Risk Indicator rose another point to 24 (slightly below its median) and the MRI Oscillator still shows significant upward risk pressure at +7. Three components rose in risk while the Relative Valuation Index declined. RV is now back in its neutral range. Currently one component (Speculation) is showing bearish values while another (Divergence) is indicated as bullish.”

“Being at a point in time about 13 weeks after the March, 2020 Lows puts our Speculation Index in an odd place. It looks back 13 weeks in its measure of market risk. So, it is currently looking at the market lows for comparison. That gives Value Line’s “Best Performers – Latest 13 Weeks” an incredible showing of all 41 stocks listed being ‘up’ at least 150%. Compare that to the “worst” stock list requiring just a 13% loss over the same period to be listed.

Only the NASDAQ Composite remains positive for the Year To Date with the other major indexes being slightly negative so far. Considerable sorting out of available company stocks seems to be occurring while investors attempt to divine which will endure C-19, presidential elections and quarterly reporting the best.”

 

 

The Market Risk Indicator is an assessment tool that serves as a guide through all markets as to the prudent use of a liquid cash cushion. It helps determine an approximation of the amount of cash reserve relative to a diversified equity portfolio. (this is depicted by the graph above)
At times of high risk in the market, the MRI will suggest a higher level of cash reserve. At times of low market risk, the MRI will suggest a lower level of cash reserve. This investment process helps to measure and manage market risk.
Because of this, the fear associated with the uncertainty of the market can be replaced by the security of a sound investment strategy.

 

 

 

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