For the past week or so, I have shared some minor stock market concerns, but also opined that it looked like the major stock market indices were going to make new highs for July before any downside was forthcoming. On Tuesday, all five major indices scored new highs for July right at the open ad then steadily eroded those gains throughout the day. All except for the Dow Industrials which continues to establish leadership. The S&P 400 and Russell 2000 exhibited the weakest performance during the day and have gone from leader to laggard in ugly, “key reversal” fashion.
Sector action wasn’t much better as all four key sectors open at their highs and closed near their lows. Only the much maligned high yield bond sector bucked the trend by opening higher and trending higher all day. The question now is if the bears can take advantage of what appears to be a slightly wounded bull. As I mentioned in the update last night, I think it’s time to play some short-term defense until the storm clouds pass.For those curious, it does not seem like Treasury bonds are going to provide much safe haven if stocks pullback. However,as I wrote about on Monday, gold and the mining stocks have really caught my eye and for more than just a trade.
I am on a train to New York right now so I won’t post the charts until the next update but I think you get the picture. Short-term concerns. All-time highs still in the cards.
