Market Risk Report as of October 19, 2020

From Chief Investment Officer Tom Veale,
“Being a “Black Monday, October 19th, 1987” anniversary maybe we should expect the SignalPoint Market Risk Indicator should rise, just to show reverence. This week the MRI rose one point to 36, three points into its bearish territory and 13 weeks of indicating less than optimistic near term market conditions. The MRI Oscillator shows +6 indicating rising risk pressure while 3 of our 4 MRI Components signal bearish levels.”


“Our Relative Valuation, Speculation and IPO Activity Indexes are all currently giving bearish signals. Only our Divergence Index is currently neutral. Market breadth wasn’t as good last week with declining stocks outnumbering advancers by small margins. Even so, market indexes showed little change over the previous week.”

 

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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