Market Risk Report as of September 14, 2020

From Chief Investment Officer Tom Veale,
“Just one component of SignalPoint’s Market Risk Indicator is still bearish, the Relative Valuation Index. The Speculation Index finally felt the downward pressure displayed by the market indexes’ declines and is now back to being neutral. Overall, this helped the Market Risk Indicator drop a point to 35 and take the MRI Oscillator to minus 5. The Oscillator is showing significant downward risk pressure.”

“While the MRI is still bearish overall (8th week), we see the potential of it reverting toward its median value.

Value Line’s “Worst Performers, latest 13 Weeks” list of 41 companies has 7 of them being from the Energy sector. Energy has occupied many positions on the “Worst” list for quite a while so far this year. Locally in Wisconsin we’ve seen gasoline prices at or near $2.00 for a while. While transportation fuels are part of the energy sector spectrum low demand in other areas seem to be keeping this sector humble.”

 

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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