Over the past week all of our core health indicators improved even as the market consolidated. The worst that can be said about this market is that some of our indicators are starting to show over bought readings. However, over bought conditions can persist for a long time so all we can do is watch for them to turn back down.
Another interesting point is that perceptions of risk are very low. This is positive for the market. This is one of the things most market participants get wrong. They believe that if everyone is bullish and measures of risk like the Volatility index (VIX) are low the market should fall. The problem with this belief is that those signals are almost never timely. Sentiment can stay high and VIX can stay low for a long period of time before the market corrects. I look for dramatic changes in those types of indicators, not a specific value to warn that the market may fall.
Below is a chart of our market health indicator categories. All of them are above zero so our core portfolios continue to be 100% long.