Bottom line
- A mixed environment favors becoming defensive if optimism is high and aggressive if low; currently, there is conflicting evidence but would slightly favor becoming more aggressive should optimistic extremes recede further
Market environment Positives Negatives 1. Price pattern (barely) 1. McClellan Summation 2. Moving averages 2. % of Stocks in Correction 3. % Stocks > 200-Day 4. Net New Highs / Lows Sentiment / Breadth / Misc. Positives Negatives 1. Confidence rising 1. Still signs of options speculation 2. Spring thrusts, recoveries 2. Equities high vs GDP, Assets 3. Commercial hedgers net long 4. Easing internal momentum 5. Excess liquidity is still high Other Sectors and Assets Positives Negatives 1. Energy (here and here) 1. Skewed tech (here and here) 2. Dollar test