Market Risk Report as of September 18, 2023

From Chief Investment Officer Tom Veale,

The 2023 market run-up and consolidation has left us with the major indexes off their highs but above the year’s start. The best explanation would be that ceilings were reached with valuations that were too high. The consolidation we’ve had has allowed Earnings to catch up with Prices. Here’s SignalPoint’s Relative Valuation Index history:

As can be seen here this index has been stubbornly higher than is usually sustainable. It’s now at the lowest level in over a year but is still only just down to its cautionary threshold. As interest rates have moved upward, the Price to Earnings ratio has had to accommodate that change.

The SignalPoint Market Risk Indicator (MRI) is steady this week with a mixed review from its components. While fundamentals improved a bit we also saw confusion grow about the markets’ next move.

Last week we saw concern in some sectors and some positive moves in more defensive areas. Utility stocks have moved up nicely since the start of this month. Other, more growth oriented sectors have been soft over the same time frame. We’re vigilant in watching for opportunities on both fronts.

Best regards,

Tom Veale

The MRI comes in at 30 again this week with a minus 2 for the MRI Oscillator. The slight downward risk pressure is slowly helping with overall market risk.

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