Pullback Started

Greetings from the Sunshine State where it is hot, humid and windy. I had planned on doing an update yesterday morning, but the geniuses at Tweed airport decided that folks with TSA Pre and Global Entry no longer get their own line. Instead, they created one single line for all those dropping off luggage, TSA and regular security. That is called a cluster of insanity. When I questioned why they did this over the past two weeks, I was told to get in line or security will remove me. What great customer service!

On Monday I went from New Haven to Orlando to Melbourne to Jupiter to Boca and to Pompano. Long day, but I love visiting clients.

Over the past few days a pullback has started. No one on earth should be the least bit surprised after the epic melt up over the past six weeks. I guess the lemmings who piled into semis with leverage right near the top may be surprised, but they get what they deserve. The culprit for the pullback is bond yields, but it’s irrelevant. I wrote about bonds last week and how 4.75% to 5% should be a loose ceiling.

The S&P 500 is below. Early weakness is seen in pre-market. I expect the bulls to make a stand today or tomorrow.

Below are two double charts. The first one has the S&P 500 in the upper panel with the number of stocks making new yearly lows below on the NYSE. With the stock market so close to new highs, it’s a warning sign that stocks making new lows has been rising like it did in late October and early February.

The same idea is below but with the NASDAQ.

Parabolic rallies usually do not end quietly. They typically punish late comers and swiftly. The move to new highs has come sooner than expected. I think the next 4-6 weeks will say a lot about what happens in Q3.

On Friday we bought SSO, VGK, more COMB and more EWT. We sold JNK, EPU, some QLD, some MQQQ, some ARAY and some EWY. On Monday we bought more MQQQ, QLD and TQQQ.