Pain Ahead

It's been awfully hard to bet against the bulls lately. Bad news hasn't seemed to matter. However, there have been some menacing trends developing. The breadth of this market has faded and the advance has been led by fewer names. Sure AMZN and AAPL shot up after earnings but the entire banking sector is dropping like a rock. Pretty hard to sustain a bull market when the financials, which represent more than 20% of the S&P, are this ugly.

Housing is a debacle. The economy is slowing. The popular viewpoint these days holds that these two facts are unrelated. Not so. Housing has sustained the economy for several years and without it the American consumer is in trouble.

Don't forget oil at $76. Collapsing dollar. Inflation problem. I could go on and on. Never have I seen such a divergence between reality and the market averages. Increasingly a market dislocation, always a low probability event, is a possibility worth considering. Be careful out there.