From Chief Investment Officer Tom Veale,
May is closing with the SignalPoint Market Risk Indicator dropping another point this week. Risk has been slowly abating with sluggish IPO activity and very little broad market speculation. While still above its median level, the MRI has managed to stay away from its cautionary region.
The short term treasury rate again rose last week and now sits at 5.409% annualized. This has kept pressure on the Price to Earnings ratio and kept a lid on upward stock price movements. The exception is the rather limited area of Artificial Intelligence, which has been receiving nearly non-stop headline attention. Many are now considering that area to be a ‘mini-bubble.’ This comparison of the three major stock indexes shows this nicely.
It would appear that A.I. is domiciled on the NASDAQ Composite with a far lesser influence on the S&P500 and even less on the Dow 30.
The MRI shows two components neutral with one cautionary and one proactive again this week. It dropped to 30 overall with a minus 1 MRI Oscillator (very slight downward risk pressure). Our Divergence Index is still above median but below its cautionary threshold. Market breadth remains somewhat confused as we head toward June.