Marking Time

Equities continue to push toward new highs; advance-decline stats have improved as market participation in the uptrend widens. An interesting deterioration in growth relative strength vs. value suggests repositioning (we have not seen the move from small caps to large caps, but there has been much talk about that recently -- large-cap, dividend-paying equities). Put/Call ratio (particularly its EMA 13) has been downtrending while VIX remains in the basement, both cautionary indicators.

Gold and the Dollar have move in tandem (up) since early 2010, which in the past has preceded a decline in treasuries (which are looking wobbly these days as rates firm). Corporate bonds (LQD) have fared much better as retail funds have pushed into this sector.

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Risk/Reward favors caution

No doubt the equity markets have been on a bullish run that appears (based on market internals) fragile. We continue to favor tighter trailing stops on longs and partial hedges on short positions.

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