June 5, 2017

Market leadership appears to be narroying

U.S. stock-market indexes closed at record highs last week with the Dow up 0.6%, the S&P 500 up 1%, and the Nasdaq with a gain of 1.5%.

The S&P 500 index closed at a record 2,349, after touching an intra-day record at 2,440. Technology, with a 1% rise, was the top performing sector. Energy shares finished down 1.2%, largely following oil prices. The Dow Jones Industrial Average closed at a record 21,206. The Nasdaq went to close at a record 6,305.

This meteoric rise in stocks has continually surprised many investors including Doug Kass. He writes,
"Based on every thing that I have learned over history in terms of causality, stocks should be selling off and not rising to new highs. 
Indeed, the last time I had a similar feeling was back in the late summer/early fall of 1987--right before Portfolio Insurance took our markets down dramatically in a one-week period. "

Nevertheless being a disciplined trader, it appears that he reduced his short bets over the week. Lets see what this week brings to the market.