Over the past week our core market health indicators mostly declined in the face of a sharp three day rally. The only indicator to strengthen was our measures of risk. Risk abated a bit, but it is still in the area that could cause our market risk indicator to warn if the current rally fails.
Our measures of the economy slid lower. They just can’t seem to get a foothold and turn up. Our measures of market quality fell substantially, market strength fell slightly, and trend held steady. This is a bit disconcerting and could signal that this rally won’t have legs.
None of our measures of market health fell enough to cause changes in our core portfolios, although our measures of market quality and trend are close enough to the zero line that a failed rally may drag them negative. As we stated yesterday, we’re waiting patiently for more information rather than trying to predict the future.