Since May 3rd, the path of least resistance has been up in the major stock market indices. That is supposed to continue although I will soon be on the lookout for a short-term pause or minor pullback. With the small cap Russell 2000 leading, there has been little to complain about lately, at least for the bulls. While none of the four key sectors are knocking it out of the park, they all look poised to head higher. Energy has been leading as is typically the case at the end of the cycle and bull market with high yield bonds being dragged higher and lagging as we normally see in the latter stages.
As I wrote about last week, the NYSE A/D Line is scoring all-time highs which typically insulates stocks from a bear market for 3 to 21 months. The gains may not be as sexy and sultry as they once were, but stocks remain the place to be over the intermediate-term. It’s time to temper expectations that a rising tide will lift all ships. I fully expect rallies to begin to become more selective.
