Back-to-back distribution days after record highs

It was only three trading sessions ago that the DOW hit an all-time high, closing above 17,000.  But then the markets sold off yesterday, and today the indexes closed down significantly in high trade volume.  After the back-to-back distribution days Investor’s Business Daily has changed the market outlook to “uptrend under pressure”.

Earnings reports will start trickling out this week and the analysts are giddy, expecting profit growth of 5-6%.  The administration is boasting of 5 straight months of job creation exceeding 200,000.

So what’s driving the sell off?

Maybe it’s the Israel/Hamas skirmish…slowdown in England and German manufacturing…stagnant wages…rising inflation…distorted GDP…false reports out of China.  Who knows?  Maybe it’s just the market coming to the realization that Quantitative Easing is past the point of diminishing returns.

The important thing is to be cautious right now.  I remain mostly in cash.  But no one can be certain.  The indexes are all well above their 50 day moving average and this has been a resilient market for nearly two years.  Time will tell.

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