Market Risk Report as of March 7, 2022

Tom Veale
March 7, 2022

From Chief Investment Officer Tom Veale,

As is shown below, last week wasn’t very kind for investors on the Long side. However, the bright spot is the Energy sector. It’s showing up at the Pumps that crude oil is back above $100 for the first time in a long time. While the Year To Date index readings are not pretty the 1 Year results seem far less painful.

SignalPoint’s Market Risk Indicator has quit dropping in risk assessment at this point. Risk remains above the median value yet again. Of greatest concern this week is we’re not seeing a significant drop in the market’s Price to Earnings ratio. It’s down from the start of 2022 but has been stubborn the last couple of weeks. While Value Line’s 1700 stock index shows 17.9 for a P/E average it’s the high inflation that is making this level too high. Value Line’s average dividend is just 1.9%, and compared to CPI Inflation of 6%, yields just aren’t covering inflation cost.

Activity in our various investment strategies has been decidedly on the Buy side recently. However, as with the data shown above, we have sold some of the Energy position in several. The opportunity to harvest some profits should make us feel a little better at the gas pumps.

Our International Signal portfolio continues to be active on the Buy side and similarly structured ETFs in our globally oriented strategies are as well. Where these components are seeing the most activity is in the European sections.

Best regards,
Tom Veale

Our MRI remains at 34 this week while the MRI Oscillator rose to +5, an indication of rising risk pressure. The MRI isn’t built to watch headline news, just the trade and value data that is affected such. It’s not sensitive directly to current events but acts as a mirror reflecting the changes in attitude.

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