One of Dave M's partners at newly formed Numetrix Capital (a research firm focused on multi-manager and multi-strategy portfolio diversification), Paul Schatz, is filling in for Dave this morning. Here are Paul's latest thoughts on the "state of the markets."

Good morning. The Dow hit yet another all time high yesterday and there hasn’t been a 10%+ correction in 35 months. When stocks opened sharply lower on July 10th, the bears came roaring out of hibernation calling for everything from a 10% correction to the end of the bull market. It was a sea of ugly red prices on my screen due to Portuguese bank worries, and weak China data. That decline didn’t even last a full day. Nor did the decline based on the -2.9% GDP print or Yellen’s previous press conference or a host of other headlines that were quickly absorbed.

I just cannot understand why more people are not excited about this market. It has truly been a bull market for the ages. The masses just keep hating and disavowing and predicting doom and gloom while the rest of us are smiling ear to ear for as long as we can. Bull markets do not end overnight and while this one continues to be old and wrinkly, it is generally healthy.

Because I am running out of ways to celebrate after all these years, I thought I would spend some time exposing some of small cracks in the pavement.

What can the bears hang their hats on?

For now, the S&P 400 and Russell 2000 are seriously lagging the Dow, S&P and Nasdaq. High yield bonds, a major canary in the coal mine, have been lagging for almost a month. The NYSE advance/decline line has not confirmed the recent all time highs and has been lagging all month.

Is that enough to end the bull market? Hardly, but it could certainly spell market pullback at any given time. Have we had these types of warnings before? Yes, many, many times during this bull market with most common outcome being a short-term pullback.

Weakness remains a buying opportunity and the Dow should continue to power higher to 17,500, 18,000 and perhaps even higher before all is said and done.

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Wishing you green screens and all the best for a great day,

David D. Moenning
President, Chief Investment Officer Heritage Capital
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Positions in stocks mentioned: None

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