From Chief Investment Officer Tom Veale,
The “Turners” of old couldn’t out perform the tumbling act the markets have been doing lately. Even so, market risk remains flattish as we watch the indexes jump and cartwheel. This week comes in steady with three components falling and one rising. Our Divergence Index shows confusion among investors while our Speculation Index indicates most speculative cash is on the sidelines.
Good earnings reports and a flat market has helped to bring down the Value Line median Price to Earnings ratio a bit. That has helped balance against the rising Short Term Treasury rate (now 5.274%/yr). The 10 Year Treasury is still stuck at 3.5%/yr giving the ‘yield curve’ its troubling inverted shape.
Last Friday’s impressive rally probably helped “long” investors feel better over the weekend while those “short” the markets might not have slept as well. Our Portfolio Strategies have been quiet in activity as the markets have sorted things out. A view of the latest 12 Months shows significant differences by Business Sector:
We remain vigilant, watching for both inventory and profit opportunities.
The MRI comes in again this week at 32 with an MRI Oscillator of minus 1. The Relative Valuation Index and the Divergence Index both are in their cautious territories while Speculation is neutral. The IPO/New Issues Index shows very little activity and is in its proactive range.