Market Risk Report as of June 28, 2021

From Chief Investment Officer Tom Veale,

“The Russell 2000 Index led last week’s rebound rally and also leads in the Year-to-Date gain for the major indexes. Even while some components of our Market Risk Indicator remain above average for risk the two riskiest dropped in their own ranges. Overall the MRI dropped again last week as the pendulum swings slowly back toward the Mean.

The abating risk is occurring without any significant drop in the major indexes so far. The high plateau on which the indexes find themselves makes for an unusual consolidation compared to history.
Speculation in established companies remains relatively quiet with roughly average gains over the latest 13 weeks. The more zealous speculation that occurs with New Issues and IPOs has slowed down in the last month and is dropping back toward its long term average.
Investor consensus as viewed through the lens of our Divergence Index is close to its average level and is somewhat confirmed by what is seen in the Advance/Decline ratio for the indexes. Last week advancing stocks outnumbered decliners by better than a two/one margin.
We continue to look for profit opportunities while the markets consolidate. Our reserves of cash for the equity portfolio strategies are fully funded for the perceived market risk. A continued vigilance is required during these times of difficult market forecasting.”
Best regards,
Tom Veale

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