Marketview: Healthy Conditions Continue

Let’s start off with the negatives:  1) GDP was a bit light compared to expectations, 2) the Fed extended ZIRP to 2014, 3) market volume/liquidity sucks.  We can all pretend that the Fed decision represents an unabashed greenlight to buy risk assets, but the truth is that ZIRP still represents a big unknown that will most likely end in tears (but when?).  While there are a lot of positives to look at in the economy, the Fed sees fragile conditions and overall softness.

The positive are: 1) credit spreads continue to come in, 2) sovereign yields are relaxing (but WTF, Portugal?), 3) the market is trading well in the face of bad news (Greek default talks), 4) tech and “global growth” names have emerged as leadership in the bull run.

Overall, the market feels healthy again.  The right stocks are working, the right sectors are working and the sentiment conditions are conducive to a continued rally.   We are now into month-end markup coming out of a strong January in a market that everyone still kinda hates.  The bears are frustrated, but so is everyone in the western hemisphere with a Series 7 waiting on a pullback.  One fly in the ointment of the technical picture, and traditional warning sign, is that volume is very anemic.  The lack of volume most likely represents low retail participation in the rally.  A probably scenario is that retail will have to do what they always do; buy at higher prices.

We are super overbought, and the pullback is coming.  Overall, while the data remains mixed, the market feels like it will continue to surprise on the upside.

Winners: $EMC, $AAPL, $CAT, $FCX, $GS, $BAC, $SLB, $NOV

Losers: $XRX, $VZ, $T, $S, $MCD, $PG, $AEP, $WFC, $USB


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