As I stated many weeks ago the short squeeze would be brutal. Now I am being asked is the bull market resuming? Do we go to new highs?…maybe we do. However, take a look at the following two charts. They are HYG compared to TLT and XLY compared to XLP. As you can see they are making lower highs so far in this rally. In 2009 at this point in the rally off the March lows it was clear that High Yield and Cyclicals were starting to outperform as they blew away the prior structural highs with ease. Its hard to get excited about a market run, as impressive as this has been, without seeing credit and cyclicals leading to the upside. Rather than waiting for the market to roll I am looking at cyclical sectors that have already started to roll over. I think the bear market is still here, alive and well, lurking for it’s next victim.
The bottom line is that our friend Janet Yellen has managed to pump the algos into a frenzied index eating machine on no volume but if you look underneath you can find the canaries of the top in individual names and sectors. I would take a look at everything auto as the sub-prime auto loan sector has rising delinquencies that will reverberate throughout the whole food chain ripping it asunder.If you enjoy the content at iBankCoin, please follow us on Twitter