Last week's data reminds us that market risk doesn't leave the system completely, but sometimes just hides from investors' eyes a while. Also, it's a reminder that shorter term predictions are just that, shorter. In both the v-Wave and the MRI's cases, we see the market risk is down substantially from the start of 2025. On a week to week basis, it's a bit less clear what the direction of risk might be. The MRI declined another point this week to its Median of 26% suggested cash. The v-Wave moved upward during the same time. These two are not the same, even if over the long term, they tend to follow the same general pattern. The MRI has smoothing math built in which make it a bit less 'reactionary' compared to the v-Wave on a weekly basis. Even so, the v-Wave is now at its Median value of 29% suggested cash for its 3-5 year forecast.
We can look inside the MRI with its four components where the v-Wave is not transparent for us. This week three of the four MRI components rose slightly in their risk assessment with one remaining unchanged. The MRI Speculation Index remains in its "Proactive" range while the other three are neutral. Even so, the MRI Oscillator is at minus 2, suggesting slow and further decline in market risk. Looking at the market indexes themselves we see Bulls and Bears still locked in their struggles. The Media is littered with forecasts about the economy and its direction. From where did all these economists and strategists surface? What are their own motives here? Are their pronouncements made to 'save' us or to irritate us?
Since our inventory management method is reactive rather than predictive, we need only to continue to follow the suggestions as to whether to build or reduce inventory. Right now my own portfolio's components are much closer to the "build" side. The majority of my positions are currently priced at or below their 26 Week Moving Average. One major exception is the gold surrogate, IAU, which hit new highs last week. I should also mention that out of the 1700 stocks reviewed weekly in Value Line, 11 of those stocks represent Gold/Precious Metals and are in the Top 41 Best Performers over the latest 13 weeks. That's a very strong sector showing. While slow to respond to its role as an inflation hedge, gold seems to have awakened. Here's a glimpse at the group from StockCharts:
stockcharts.com
Default is 200 days on the x-axis, but you can stretch that out over many years. Results aren't completely in lockstep but long trends do show up. IAU sits in the middle of the main pack, showing there's speculative value in owning the actual mining companies if one wants that added "single stock risk."
Best wishes,
OAG Tom
Buy from the Scared; Sell to the Greedy..... |
