Marketview: Always Something to Worry About

• Posted by DynamicHedge on May 18th, 2013 at 3:56 pm
• Comments: 0

The market continued its ascent to new all-time highs. As someone who has been long-term bullish for a while,  I feel like an old man of this bull run. Lots of folks are seeing the light after ignoring the positive (and non-negative) signs for so long. Short squeezes have replaced defensive stalwarts as the fashionable way to play a rally that feels like it can do no wrong (a bit frothy). Incredible how far we’ve come — yet, there is probably more road ahead of us. We have yet to enter the stage where psychology is overcommitted to positive information flow. I’m waiting for consumer sentiment readings of over 90. Even then, as long as there is momentum in the market, gains can be made.

Big stories this week were USD strength over the Yen (Nikkei to 15,000) and the resumption of what looks like a nasty prolonged bear market in gold. Not a ton of economic data this week, but next week look for the BoJ meeting, FOMC minutes, and Bernanke speaking before the Joint Economic Committee of Congress.

Sectors which saw strength this week were financials, energy, industrials, and technology. It’s amazing that oil has held up so well in the face of a strong dollar and the deterioration of other commodities. Look for some volatility in the energy space. Laggards this week were utilities, consumer discretionary, and basic materials.

Market conditions like this make everyone who sticks to discipline look like Chicken Little. While there might be plenty to worry about, the sky is not falling. The MAMOx oscillator and the longer-term MAMO both turned bullish early this week and confirmed with the close on Friday. It is NOT a good strategy to buy these flips after the market has run so far (decent signal for a quick short), but it does signal incredible underlying strength in the market and bodes well for longer-term follow thru.

Winners: $CSCO, $MSFT, $BK, $BK, $JPM, $GS, $C, $LMT, $RTN

Losers: $AAPL, $WMT, $EXC, $DELL, $INTC, $HPQ, $CMCSA, $$NWSA

Read also:  Bubble Exchange: Technology vs Financials (Dynamic Hedge)