Tired Bull Market
Blog of HORAN Capital Advisors | May 13, 2013 12:33AM ET
Not much seems able to restrain the strength of the bull market in U.S. equities. On a year to date basis the S&P 500 Index is up 15.43%. The advance has finally drawn investors into equity mutual funds as reflected in positive equity mutual fund flows the first three months of the year.
The positive market results continue to keep the S&P 500 Index in a positive uptrend channel that began in the middle of November of last year. Aside from the fact that company fundamentals and valuations look reasonable, or at least not overvalued, higher equity prices could continue to unfold. However, we have noted in several recent posts the rotation that has occurred of late out of the more defensive sectors into the more cyclical ones.
Because of the significant amount of artificial stimulus being pumped into the global economy by most central banks around the world, we believe investors need to have a heightened focus on the underlying technical aspects of the market in order to gain insight into potential market turning points. No one technical indicator is the panacea that will predict the market's future direction. One indicator useful to evaluate for the market and/or individual stocks is the looking at the chart with the MFI overlay , it does show some potential stock weakness ahead when looking at just the MFI.
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