Shares of Gilead (GILD), Netflix (NFLX) and Tesla (TSLA) have rocketed to record peaks. The S&P 500 is on track for its best monthly performance since October. And the overwhelming majority of CNBC commentators assure viewers that the bullish case for stocks rests on a solid foundation.
While there may not be a compelling reason to abandon broad market equity exposure in developed markets like the United States and Europe, risk-off safety seeking is on the rise. Inflows into bonds and precious metals have helped push prices of both asset classes significantly higher in 2014.
In 2012 and in 2013, economic data did not require excuses about weather patterns. The percentage of companies beating earnings expectations rarely disappointed. And monetary stimulus had never been more accommodating.
Today, the economic news disappoints regularly, earnings growth appears to be decelerating and the Federal Reserve is reining in its electronic dollar creation. It follows that many investors still feel good about purchasing the dips, yet they are also acquiring risk-off investments while simultaneously dumping emerging market equities.
If January’s sell-off and February’s rebound suggest anything, it is the fact that 2014 figures to be a rockier road.
Similarly, here are 5 ETF indicators that point to more choppiness ahead: