February saw a powerful risk-on rally with stocks. Notably cyclical sectors and broad market rallied reversing some of the defensive posture that has been building. This has resolved some of the glaring divergences in market. I was expecting the divergences to be resolved by pull back in large caps but for now, it is still a bull market.
So divergences remain: The credit spread is still flashing red (HYG/TLT), 1/VIX is still in the downtrend, and new highs/lows signal weakness at ATH. The market is weaker than the headline number suggests.
No comments:
Post a Comment