Despite significant warnings from the S&P 400 mid caps, Russell 2000 small caps, Nasdaq 100 and a host of sectors, the Dow Jones Industrials and S&P 500 are poised to see all time highs this week. The headlines will look nice and investors may cheer, but serious damage remains beneath the surface over the intermediate-term.
Yes, we remain long various indices and sectors, but we will likely lighten up or hedge on a quick spurt higher. If we do see a run to new highs, it will be very telling to see how the lagging indices perform versus the leaders.
Additionally, as I have written about many times before, I think I have been just about the only long dated treasury bond bull around. It has been a fantastic run. I am keenly interested in how treasuries behave should stocks breakout to the upside. For much of 2014, bond bulls have stepped up into every pullback and that indicates something negative brewing on the horizon for the economy or stock market.
Paul Schatz is President and Chief Investment Officer of Heritage Capital, LLC, in Woodbridge, CT. Paul developed and manages all eight of the firm’s currently offered investment programs.
Paul brings an increasingly high tech approach to investing by enhancing all of the firm’s investment models and data monitoring using sophisticated computer programs. Heritage Capital is a Registered Investment Adviser.
Editor’s Note: Be sure to check out Paul’s Blog: Invest For Tomorrow