– Dovish Fed is the biggest difference between MRI readings at the start and end of 2020.
– Short-term breadth weakens, but the High Low Logic Index has given a new buy signal.
– Margin debt growth climbs above 30% – our longstanding rule of thumb for speculative markets vulnerable to correction.
– Stocks declined modestly, while Treasuries and REITs moved higher during the shortened holiday week.
– Only two sectors advanced, Tech and Financials. Energy stocks had another substantial weekly decline.
– Momentum in Chinese equities is slowing. China declined by 3% last week, are down for the month and lagging most countries for the last 3mos.
– Lumber prices advanced by more than 5% and have more than doubled in 2020.
– Stocks and commodities climbed, while Treasuries and REITs declined.
– Sectors went back to the old 2020 playbook, with Tech rallying and Energy falling. There was more than a 7% spread between the two sectors 1-wk performance.
– A falling dollar continues to provide a tailwind for international equities, which outperformed US markets for the week.
– Treasury yields and commodity prices moved higher as the dollar slid by more than 1%. Bitcoin was up more than 24% setting a new all-time high.
– Market Risk Index increases – no signs of a break in speculative behavior.
– Breadth still giving the all clear, suggesting more records in stock market enthusiasm will be broken.
%
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)
