– Risk assets were down across the board last week, and Treasuries rallied on a surge in virus cases across the US.
– All sectors and styles declined, but Technology was a relative safe-haven, down only 0.4%.
– Asian markets bucked the global trend and closed flat. The region leads all others year to date.
– Lumber and copper managed to continue their advances alongside gold last week and not signaling a return of deflationary pressures.
– Psychology deteriorates, but Monetary conditions improve
– This combination of lots of call option buying and high volatility hasn’t occurred since 2000.
– NYSE High Low Logic Index Buy Signal
– Monetary composite is improving, but recent surge in lending and leverage is holding it back.
– ..and, this week’s best charts.
– Equities and commodities rallied, while REITs & Utilities sold off, and Treasuries were weak. Classic reflationary trade moves.
– Still a market that centers around the FAAAM stocks. The further you move from large or growth, the worse the ytd performance.
– US Dollar has backed off substantially in the last month, signaling the global panic for dollar safety that started in March is subsiding.
– Broad moves higher across economically sensitive commodities last week – copper, oil, lumber. Lumber prices jumped nearly 19%.
– Volatility and Breadth have kept psychology from climbing into the worst quintile of readings.
– Fed actions are beginning to impact and improve our monetary composite.
– US equity valuations don’t make sense given a backdrop holding this much uncertainty, when uncertainty is supposed to be the playground for stock market bargains.
– Markets balked when breadth improved.
%
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)
