Weekly Risk Signals

All four of my signals are in the risk-off position and confirming the high risk environment that exists in risk assets right now. This week’s inflation report and Fed meeting will very likely be the catalysts for larger market moves, either good or bad. Conditions that are this risk-off don’t hang around for a long time.

The biggest development in the weekly risks signals is that the Treasuries indicator has finally flipped. Treasuries have begun rallying strongly again. Plus, they’re doing it in conjunction with other predictive signals. Stocks should be doing well here, but it’s utilities, Treasuries and gold that have been leading. I’m still convinced that this is the return of traditional risk-off behavior.

The overall intermarket trends continue to suggest that conditions are tilting more risk-off, not risk-on. This is once again beginning to look like a market where asset rotation strategies can outperform. If the labor market remains tight, as is expected, it’ll give the Fed no reason to pause sooner than later. Even though stocks have rallied recently, we’re not out of the woods yet.