– US Equities declined slightly, while other risk assets moved higher.
– Most sectors declined, but Energy was a notable exception, advancing by 5.3% and taking value indices along with it.
– It was a big week for Emerging market stocks – up more than 2.6% – bringing their ytd return up to 2.1%.
– Broad advance for commodities – crude oil prices are up nearly 12% in the first two weeks of January.
– NYSE High Low Logic Index joins the NASDAQ version of the index, as both now signal a split market.
– Dow Jones Bond Oscillator signals tighter liquidity.
– Producer Price Inflation has peaked but is still running too hot.
– The first week of 2022 begins with only Commodities in the green. All other major risk assets declined, after Fed minutes revealed a more hawkish Fed.
– Value stocks, Energy and Financials were the only asset classes to advance.
– Lumber kicks off the year with a 10.7% increase, and oil moved higher by 4.9%. Fixed Income struggled across the board, with Treasuries particularly hard hit.
– Unrest in Kazakhstan was partially to blame for a 9.6% fall in Bitcoin. The gov’t shutdown of the Internet caused the hash rate to fall by more than 10%.
– Higher rates cause Monetary Conditions to worsen, but Bond Momentum buy signal is unlikely to reverse soon.
– Key inflation indicators peak, but levels are still too high.
– Levered ETF Sentiment hits FOMO
– Tale of Two Breadth Thrusts
%
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)
