After the recent run, the markets took a breather yesterday with the S&P; 500 resting right on its 200-day moving average of 1,114. Attempts of breaking above that level proved to be ephemeral in nature as the 1,121 level was only touched and sideways movements prevailed for the remainder of the session.
Not helping matters was a gloomy report on consumer confidence with the index hitting its lowest level in five months. That should come as no surprise as the jobless rate is anticipated to hover around the 10% level for the foreseeable future.
Last time I checked money for consumer spending and home purchases is usually derived from earned income via a job. In the absence of any improvement in that arena, prospects for a solid recovery remain a mirage.
Be that as it may, the indexes did not sell off yet after the recent run up, which could be considered a bullish sign. However, it remains to be seen if the failing faith in the economic recovery will eventually be noticed by Wall Street and play itself out via a trend reversal.
While I believe the odds of this happening are great, right now I will treat this up move with great respect (with only limited additional exposure) knowing that through my lens the fundamentals simply do not justify these lofty levels.