The major stock market indexes continue the same trend as they have over the last few months. Daily volatility is increasing as the equity markets creep higher and continues to build a technical trading range pattern that will eventually give insight to a longer term direction.
We think many of the individual stocks are exceptions to the trend, with smaller stocks being generally stronger than large-cap stocks over the past few months, which could be mostly due to the weakness in the energy sector, and has had a pronounced downward pull on the S&P and DJIA over the last few months. In our opinion the net effect of all this is that there does not appear to be a bigger move developing near-term for the market as a whole, but most likely more of the same can be expected in the months ahead. In a broad sense, the higher-yielding and smaller-sized company stocks are where we see some of the better opportunities going forward.
TRADING UPDATE: Remember, geopolitical tensions may override generally bullish fundamentals. This may contribute to increased headline volatility that is difficult (if not impossible) to anticipate as to when it may occur with either fundamental or technical analysis. We are still cautiously reducing our cash weighting and buy equities within sectors that we feel will respond well during this upside momentum. This market is being forced higher and we will move in unison with the rally. However, we remain cautious and will look for anything that could derail the current trend.