In Pictures: Why I Still Remain Cautious

As they say, a picture can often say more than any collection of words can hope to convey.  With that in mind, below is a trio of charts that illustrate why I still remain cautious on the equity markets.  To be sure, I have to recognize that the bullish euphoria that has swept through this market over the past month appears to remain firmly in place.  As such, this rally could remain in place for several more weeks.  That said, looking at the economic fundamentals as well as the technicals, my read is that challenges still abound.  A close examination of the following charts, I believe, will show why this concern is still warranted.

There are few things more difficult than remaining bearish in a market environment that continues to march higher.  For my part, I've been pulling my hair out for the past three weeks trying to figure out what the markets are trying to tell us.  And, to be fair, when the break above the 1,131 level on the S&P materialized, I did state that the market was likely to push higher, even up to 1,075.  However, the longer-term message I continue to receive from the markets is that of caution.  At some point, I may have to give up this stance, but I just can't find enough bullish factors to push me over the edge.  Looking at the historical performance data for the S&Ps, the next couple of weeks have a bit of an upward bias, which suggests a move higher is probable.  But as this is the best performing month of September on record for the S&P 500, I have a hard time buying into the rally at this point in time since the risk certainly lies more on the downside. 

Until tomorrow.....