Below are some of the most interesting things I came across this week. 

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The current bull market has been extraordinary. As Bridgewater reports, “Out of any 15-year period to be invested in equities dating back to 1970, the one we’ve just lived through was the best. Stocks have been on a relentless tear, with any dips quickly fading into memory. Returns have been more than double the average.”

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Over the past couple of years, gains have largely been driven by a FOMO-driven momentum chase. As Bill Smead writes, “It is the most all-encompassing momentum market of my 45 years in the investing business.”

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However, the inside of the stock market is starting to send a clear warning regarding the trend in the underlying economy. “Since 1990, we have never had as big of a decline as we have in the ratio of consumer discretionary to consumer staples stocks during the last month without a much larger pullback by the overall S&P 500 index,” writes Jim Paulsen.

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Investor risk appetites are also displaying an important change in trend. Tom McClellan writes, “…when there is a divergence between the SP500 and the price of the highest VIX futures contract, that is worth paying attention to. A divergence does not mean that a top has arrived, but it tells us that we may be building a much more significant price top than just an ordinary one.”

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