#marketcommentary

So far the momentum on the current rally has been weaker than what we experienced coming off of the August/September 2015 bottom.  A couple different very short-term breadth thrust indicators fired, but longer-term breadth indicators as well as volume have not shown the same kind of thrust off the lows.  This price action taken in conjunction with the trend remaining negative suggests that the market is in the midst of a bear market rally as opposed to beginning a new bull market.

The market today hit our stop-loss, and thus we are forced to go to cash as the negative trend remains in place and the market is now exhibiting signs of downside momentum.  In addition, market breadth remains poor with less than 40% of issues above their 200-day moving average despite the market being just ~5% off its all-time high.  In addition, other indicators of liquidity and market health such as high- vs. low- quality, credit spreads, small cap relative performance are all pointing that the market goes lower.  While seasonality remains favorable at least through the end of the year, we must stick to our discipline and manage risk.