Marketview: The Heavy Hand

Volume was thin this week and the rule of never short a dull market still stands.  We had a very traditional “risk on” trade this week except that it lacked the vigor we’ve come to expect when you see $FCX, $CAT and a grab-bag of garbage financials trading higher.  The risk on trade is only half the story, of course.  Investors were dumping utilities, healthcare, consumer staples and anything associated with safety that was a big winner last year.  This rotation definitely makes the market feel heavy.  On a positive note, the back and fill action looks somewhat constructive for higher prices.

I’m negative on the market at the moment due to the creeping credit spreads and latent fat-tail risk.  Let it be known that I am a big bull market guy at heart.  And while the market is on watch it has not broken down.  We remain at a major crossroad.  If we can build off this move and get above the 1300 in the $SPX for a sustained period we will have a situation which will surprise a lot of people.  Remember, lots of folks out there are still zerhedging.  They still have the helmet on and chin strap done up tight from Q4 2011.  People will scramble to chase this market higher if it stabilizes.  A big if in my book, but still a contingency you must plan for.  If we break down.  Well, you know the story.

Winners: $BAC, $C, $MON, $AA, $DOW, $DIS, $FCX, $CAT

Losers: $EXC, $SO, $ETR, $BMY, $VZ, $TGT, $MO, $CL





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