Market Risk Report as of May 11, 2020

From Chief Investment Officer Tom Veale,
“Last week’s trade activity was positive for stocks in general but better for smaller cap stocks than larger. That said, AAPL continued its recovery which helped the larger cap indexes as well as the tech/communication sector. The NASDAQ Composite has now moved back to being positive for the Year To Date. Market risk pressure as we measure it with SignalPoint’s Market Risk Indicator and Oscillator rose again this week. We find the MRI at 12 this week with the MRI Oscillator at +6. The MRI is still bullish and in its 8th week of being so but the Oscillator suggests a rising tide of risk.”

“Just one component of the MRI remains bullish this week, Speculation, while two others remain close to bullish territory but now in their neutral ranges. Speculation looks back over the most recent 13 weeks so we can assume it, too, will be rising as we move through May and into June. There still seems to be more upside potential than downside risk at this time.”

 

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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