Marketview: Risk Reward Skew

I get the feeling that no one will truly believe in this market again until we are at new all-time highs.  By then it will be too late and another bear market will be upon us.

The market closing on lows isn’t exactly confidence inspiring but it wasn’t exactly unexpected either.  At least we closed off the weekly bottom.  Overall, this week’s sell off is appears to be nothing more than profit taking initiated by the fear of slowing economic growth.  There is no evidence of a macro seismic shift in allocation or a panicked, uniform safety trade.  This appears to be a part of digesting gains and the current situation reminds me of the sentiment around October 2009 and March 2011.

Objective indicators are still keeping me on the neutral-to-bullish side of the equation.  This could change fast.  I would like nothing more than for volatility to shoot through the roof and have some good trading markets again, but I don’t think that scenario plays out in the near-term.

The story is the same as it’s been for a while: we’re in a bull market that no one believes in.  Respect your stops and respect your strategy but think constructively and not destructively about the market.  We will never, ever, ever go back to the lows of 2009.

Winners: $HPQ, $INTC, $EMC, $AA, $WMB, $CAT, $HD, $WAG

Losers: $MS, $BAC, $C, $CVX, $OXY, $AAPL, $BMY, $AMGN

Here’s the one chart that’s flashing a warning sign of risk-off.  Could be a false alarm but I want you to have it on your radar:


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