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June 7, 2014 – Weekend Market Comment

June 7, 2014 – This market is on fire. U.S. stocks furthered their record climb this week, with both the Dow Jones Industrial Average and S&P 500 in uncharted terrain, after the May jobs report showed slow but steady improvement in the labor market. In fact almost every sector from aggressive areas like Transportation, Consumer Discretionary and Technology to the safer bets like Utilities all hit new highs this week.

Market skeptics, of course, argue that complacency is again running high on Wall Street, which is worrisome. Citigroup, for example, says its proprietary sentiment tracker has moved further into the "euphoria" stage, which suggests investors are getting overconfident. And in another bad sign, Ned Davis Research says legal insider selling by corporate executives is on the rise, signalling that executives think their shares are fully valued. Of course you don't need experts to tell you this, you have got charts. Look at the VIX at a new record low.

Our Primary Sell Indicator is approaching a nosebleed. By the way we have a new CME4PIF School all about the Primary Sell Indicator.

The NYSE 50 day overbought shows you what percentage of stock on the NYSE are above their 50 day moving average. As you can see still room to go with only some 77% of big board stocks above their 50 day moving average.

Another sign that the market is healthy is a renewed interest in smaller cap stocks. As you can see that move has just begun.

Even if you pull way back and look at the markets since in 1960 the S&P 500 has not really gotten too far ahead of itself.

But lets face it, really all you can say is "boy things are going well". Now you must decide if you are counter-trend-player and pull back a bit here or a momentum player and stay all in. Well this week I did a little of both. This week I raised my trailing stops on L3 communications, Under Armour and Tripadvisor, both up some 20% in the last three weeks. I took some profits in L3 communications, but plan to get back in later yes you can thank me for a great week 121 to 125. I also moved into some stable banking stocks previously I bought Bank of New York Mellon -- BK and now I am also in Canadian Mortgage company MCAP -- MKP (with a great dividend 7%+) and added to my Bank of Nova Scotia -- BNS. There are a few reasons to look at lenders, first off they are lower volatility stocks so if this is too much exuberance you are safer and they have a nice dividend but interest rates are currently too low and that means that these firms will do well if rates start to rise and they probably will.  

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