As we discussed last week , the market not only got off the mat but rallied back to new highs. That action continued through this week. The technical backdrop is not great. With the market back to 2-standard deviations above the 50-dma, conviction weak, and investors extremely bullish, the market remains set up for additional weakness. However, we are in the first two weeks of July which tends to be bullishly biased. After increasing our equity exposure previously, we will give the market the benefit of seasonality for now. Complacency Concerns With the "money flow buy signal" not yet back to a typical peak, such suggests another week or so of upside is likely. However, as noted, we suspect there is not much upside in the market for current levels. Lastly, we discussed the high level of complacency in the markets previously. To wit: "Currently, complacency has reached more extreme levels. As noted last week, the 15-day moving average of VIX, on an inverted scale, sugge...
"La verità passa per tre gradini: prima viene ridicolizzata, poi viene contrastata, infine viene accettata come ovvia" (A. Schopenhauer)