Over the past week our indicators are showing more risk entering the market while most of our core health indicators are improving. This is a change from the past 18 months where risk entering the market has been associated with deterioration in our core indicators. This signals a change in the character in the market that we should watch closely. Market participants are now starting to show concern about world events and earnings misses. In the past, earnings misses were considered company specific and didn’t have much impact on the market. This is something to keep an eye on. Since our core indicators are all positive we’re still 100% long in all portfolios. Any changes over the next several weeks will almost certainly come on the back of an “event” or a severe down turn. In the absence of a sharp market decline I doubt we’ll have any changes. Below is a chart of our core health categories.

Over the past week market health rose, but every measure of perceptions of risk rose too. It speaks to the current theme in the market where core indicators are rising and ancillary indicators are falling. While the underlying health of the market wasn’t affected by this week’s volatility it did do some damage to market participant confidence in the market. Our core measure of risk along with our Market Risk Indicator have slowly been moving closer to warning. At the moment they have plenty of room above the positive line so they aren’t overly concerning, but something to keep an eye on in the next few weeks. Below is a chart with our core health categories.