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Molehills or Mountains?

May 23, 2016

It’s been a long run for our current bull market, nearly 3,000 days. The longest ever to date is 3,452 days – a streak lasting from October 1990 to March 2000. We’re not there yet, but maybe we’ll get there.

Of course, the flip side of longevity is fatigue, as some of us know! Well, markets tire too and this latest bull is showing its age. For instance, tech earnings weren’t pretty. Several firms reported lackluster quarters, including Alphabet (Google), IBM and Microsoft, to name a few.

Overall, the tech-heavy NASDAQ is down relative to the Dow, which could mean investors are shying away from certain sectors. That behavior usually attracts bear markets. And it really adds up when you throw in the losses from firms like Starbucks and Caterpillar. All in all, these are some of the largest cap stocks in the world. They’re part of major indexes and innumerable investment portfolios.

But we’re still growing overall…though justification for it is lacking. Earnings should be surprising on the positive side, not the other way around.

High asset prices. Weak earnings. Investor disinterest. All in a tired bull market.

So are these potential warning signs mountains or molehills?

I’m not sure if they’re mountains, but these molehills are certainly worth monitoring. If you’re not paying attention, your head is in the sand.

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