Market Opinion

I was just reading today where the past six months has been one of the calmest times in the history of the market relative to daily volatility.  So when the S&P drops 5.8% in a week it magnifies the loss, whereas in a normal run of things this kind of volatility would not be so uncommon. read more

Yes the market dropped today but you have to look at it in the grand scheme.  Below are graphs going back to 2005.  Technically the S&P will need some more confirming sideways or downward action to be material to an intermediate or long term investor.  Additionally the asset allocation has shifted slightly (200 basis points) away from equities but not decidedly. read more

The asset/bond ratios of 52%/27% has not changed, but the market is in a consolidation, sideways phase.  Now would not be the time to put a lot of new money in this market.  Small caps continue bruised, midcaps a bit less so, and large caps largely sideways.  This is the beginning of a classic breakdown but it has not proceeded much further in the past few weeks. read more

There continues to be some underlying decay in the market — note below that small and mid-cap indices are showing short term weakness in the technical model, while large caps (usually the last to fall) are still ok despite the Friday drop. read more

While there may certainly be instability this week as a result of the ongoing financial crisis in Greece, the more interesting observation is the number of market technicians and others that are saying that Greece is the tipping point and that the market will head toward correction as a result. read more

This is a snapshot of some pictures from the technical model after the past few days of Greek-related uncertainty.

The Short Term is a sell for the large and mid-cap markets, but things still look ok in the small and micro-cap elements of the market, likely due to the lack of overseas exposure.  Long bonds continue to drag — the market continues to believe that rates will rise later in the year and that the Fed is serious. read more

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Prior Week Market Performance:

• The S&P large caps lost 0.4% last week to 2108.29.
• The Russell 2000 small caps lost 3.1% last week to 1228.11.
• Long Bonds (TLT) lost 3.9% last week to 124.00.
• Asset Allocation Model: Stocks – 52.5%; Bonds 27.5%; Discretionary 20%

 Two Week’s Ago Commentary:  Right now the market technical direction is unchanged.  Still looks good in the intermediate and long term.

Current Technical Model Indicators (Short, Med, Long periods): read more