Money flows out of the equity markets have recently picked up. Negative flows have broken technical support levels like 50 and 200 day moving averages. Although the major indices do not show much deterioration, un-weighted versions of the same indices are breaking. The major indices are weighted and dominated by the very largest of companies. The un-weighted ones treat each company’s position equally. The largest companies are holding up while most of the others are in decline. This usually resolves itself by everything joining in the primary trend.

A market correction is possible here, but not likely to be major. Earnings and business fundamentals are reasonable for current levels.

It is political uncertainty with unknown future business policies that seem to be driving the current angst.

This is exactly why we have raised some cash wanting to take advantage of increased volatility as well as to be able to more easily adjust the emphasis in portfolios once the environment becomes clearer.

This is all normal management; stay steady my friends.

El Solo Toro