– Market Risk Index climbs for 9th straight week, as investor psychology reaches a new cycle high and the highest reading since October 2000.
– The average valuation metric that we track has now climbed to 2.1 times its long term average.
– Analyst enthusiasm is running hot again.
– Equity put/call ratio at 15yr lows.
– Cap-weighted US equities hit new highs on Tech strength. Shares of Alphabet within 1% of joining AAPL and MSFT with a trillion dollar market cap.
– Large cap and growth stocks rallied, but small and value stocks were down. First major price divergence between large and small caps since September 2018.
– Emerging markets were up, but developed markets declined. US & China expected to sign phase one trade deal on Wednesday.
– Commodities declined as crude prices sold off after US-Iran tensions eased. Economically sensitive commodities, copper and lumber, rallied.
– Market Risk Index climbs again, to 91.8% this week, as Investor Psychology is knocking on the door of the worst 2% of readings since 1970.
– Corporate Insider selling outpaced buying by 4 to 1, and assets inside levered broad market ETFs and mutual funds surged to a new record.
– Breadth indicators are beginning to show the first signs that the rally might be losing steam.
– The first partial week of trading in 2020 ends with US Treasuries and Commodities leading all other asset classes.
– In some of the first signs of weakness since the 2019 breakout rally began, the small cap Russell 2000 has closed down in 5 of the last 6 sessions.
– The two West African countries Ivory Coast and Ghana, which produce 60% of the world’s cocoa, have joined to form the chocolate version of OPEC.
– Commodity response to Solemani killing was a quintessential geopolitical related price move – oil and gold rallied while copper fell.
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Market Risk Index scales from 0 to 100%. Higher readings correspond with higher risk markets. Scores below 25% are bullish. Scores between 25-75% are neutral, and scores above 75% are markets vulnerable to major drawdowns.
Model Category Readings (Percentiles)
