Will The Market Ever Go Down?

Markets are up slightly again in early trading.  Overseas markets were higher overnight as well.  Yesterday, the market actually had a small down day, but if you pull up a chart you basically have to squint to see the pullback.  This has some investors scratching their heads and asking, "Will the market ever go down?"

I have been saying that with so many portfolio managers waiting for the proverbial pullback, that it was less likely we would see one.  In its perverse nature Mr. Market rarely likes to accommodate the masses.  More often it prefers to frustrate the majority.  And on that scale I would have to give Mr. Market an A+ so far this year.  I think few managers were overweight equities coming into the year, and thus not prepared for the incessant rally we have witnessed.  And I know this firsthand.

If this were a stock we were talking about, one would expect that the prolonged run-up might end in a climax run where the stock goes straight up over a short-time period as everyone throws in the towel and just says "get me in!".  I don't know if that is what we will see in the market as a whole or not.  The possibility of a melt-up is certainly being discussed, but the ongoing group rotation amongst the different S&P sectors makes it more likely that we will just see more of the same.

There wasn't a ton of news overnight or this morning.  The dollar is rallying hard as the yen falls to its lowest level since 2008.  That is weighing on the commodity complex with gold falling nearly $50 to $1420.  Oil prices are lower near $93.75.  Copper, silver, and ag prices are also down today.

The 10-year yield is getting another boost to 1.90%.  That's a pretty quick spike from the 1.65% level it hit last week. 

The volatility index is flattish so far still around the 13.15 level.

Trading comment: No changes to our recent comment strategy.  We continue to look for spots to add to stocks that haven't run too far yet.  Overall we are trimming those stocks like consumer staples and REITs that have had outsized runs and adding to growth stocks that could do better going forward.  Yesterday we trimmed some more GLD.

KAM Advisors has long positions in GLD