Our risk indicators continue to make the case that this is a risk-off environment. 14 of the 20 asset pairs we look at in our Risk Off vs Risk On indicator have the risk-off component within 10% of new highs. The tilt toward risk off leadership is intensifying. This is echoed in our relative strength rankings, which show Energy slipping and Utilities and Consumer Staples (defensive sectors) taking over the top two spots. Four times as many NASDAQ stocks have been cut in half as have rallied 50% from their 52-week lows. The improvement seen here during the rally off of the March lows has been all but undone. We have continued to see more stocks making new lows than new highs (at 22 weeks in a row, the longest such stretch since the Financial Crisis remains intact), making it difficult to construct a convincing case that the bear market has run its course. From my perspective, this is a more useful approach for identifying market environments than calculating where the indexes are relative to their peaks. For the record, the S&P 500 came into this week 11% below its peak, with the Value Line Geometric Index having lost 13% and the NASDAQ Composite down 20%.
