Market Notebook


Global equities nudged higher last week.  Equities within certain countries performed better than others with many inching higher or consolidating on the week.

The bond complex traded towards the high end of a recent consolidation range with high yield outperforming.

Several bullish percentage indicators entered the “caution” range indicating very strong price correlation within certain sectors.  Examples include health care, technology, and transportation sectors.  “Caution” within this context means that since shares in these sectors are trading higher together, it may be difficult to find value as a buyer.  The implication is that shares in these sectors are being influenced heavily by momentum.

Economic conditions in the U.S., as followed in this notebook, appear good with the only caution being the slope of the yield curve.  Globally, economies could be described as being in “low gear” generally despite widespread easy monetary conditions.  Although economic conditions appear generally ok, the short term concern is the recent run up in both equity and bond prices.  Have prices come too far too fast?  If so, then recent prices may be built upon a “fragile” base where swift corrections are possible.

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