The Big Picture for the Week of October 17

Despite the passage of time the stock market does not seem to be making any progress to getting better. The yield curve resumed its flattening. I have written before about the consequence of that. For a while we saw the yield on the 10 year treasury go back up to 4.2%. Now we are back close to 4.0%. We had a fake out break out in the S+P 500 when it spiked up to 1140 recently. The S+P is now at 1108, ouch. While I did slightly increase my clients equity exposure, I still have all accounts defensively structured.

I was quoted in the Arizona Republic on October 1st that I think tech is likely to struggle for a while. The mega cap names, I think, will continue to lag. If you want to own tech and I think every one needs to own some, I would stick with secondary names that have obvious user demand for their products.

There have been a lot of stocks that have blowup recently. The market is clearly nervous even though the VIX is still quite low. The nervousness that exists may be positive in a contrarian way. There have been several times in the last ten years when the market, faced with scary things, has rallied for no real reason at all. It just went higher. That will happen again, but I don't know when.

I would not count on the election result to lift the market. Since 1972 there has only been one time, 1976, that the market reversed a down trend after the election. The market was down in 1984 and 2000 and every other time the uptrend was already in place. While a rally would be great it should not be counted on. Dang!

Later this week I hope to have an interesting article about investing in Switzerland. I am in the process of research and drawing a conclusion. Either way it should be interesting so please check back on the blog.