Market Risk Report as of September 21, 2020

From Chief Investment Officer Tom Veale,
“The week starts with the SignalPoint Market Risk Indicator still at 35, unchanged from the previous week. The MRI Oscillator is minus 1 showing just slight decline in risk pressure this week. Three of the four MRI components rose slightly in risk while one declined nicely (Divergence Index). Three remain neutral while one is bearish (Relative Valuation Index).”

“Overall the MRI remains bearish for the 9th week in a row. It seems the excesses we saw in late Summer are self-correcting while small and mid-caps remain mostly steady.

Half of the U.S. Business Sector ETFs that we follow remain within 10% of their next sell target prices. This is also true of the component ETFs we utilize in our income related portfolio strategies. In the international arena 1/3rd of the ETFs we follow (growth) are within 10% of their sell targets while the “value” and “dividend” ETFs (2/3rds of Intl ETFs) need larger upward moves before reaching their sell targets.

We continue to look for long term opportunities for when the C-19 crisis has passed. In the meantime we hold cash in reserve for any market upsets that might occur in the shorter term.”

 

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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