From Chief Investment Officer Tom Veale,
Stock price recovery has continued to outpace earnings increases so far. This puts upward pressure on Price to Earnings ratios and therefore a rising risk posture for our SignalPoint Relative Valuation Index. Valuations relative to the “risk free rate of return” deteriorated this week with both a rise in Value Line’s 1700 stock index P/E and another bump upward in the 13 Week Treasury Coupon rate. With three of the Market Risk Indicator’s components rising this week the overall MRI’s view ticked upward slightly. This rise moves the MRI to the threshold of its cautionary territory.