As stocks continue to creep higher, with the S&P 500 scoring a record peak last month, market breadth is declining. In other words, fewer and fewer stocks are participating in the advance.
That has led many experts to call this a "stock picker’s market," because you must choose carefully to find a winner. But this isn't a good omen for the market, says MarketWatch columnist Mark Hulbert
"By telling their clients this is a stock picker’s market, advisers think they are distinguishing the investment environment from other periods in which the majority of stocks participate in the market’s major trend," he writes.
"Little do they appreciate that, in effect, they are also declaring the bull market to be getting extremely long in the tooth."
And why is that? "The degree to which stocks move together in unison is a function of the market cycle," Hulbert explains.
"In bear markets the vast majority of stocks do so, whereas in bull markets stocks tend to march to the beat of their own drummer. It’s at market tops, therefore, when stocks’ moves in step with the overall market tend to be at the lowest point."
Not everyone is bearish on stocks. Indeed Thomas Lee, founder of Fundstrat Global Advisors, has been bullish for months.
And Greece's debt crisis, which he calls a "sideshow," hasn't changed his mind. "Greece isn't the systemic risk that it was three years ago," he told CNBC
. "Focus on U.S. fundamentals, which have been really good."
While the economy shrank 0.7 percent in the first quarter, the Atlanta Federal Reserve's forecasting model indicates 1.9 percent growth for this quarter.
"I know people are fearful about rising rates and Fed tightening and what it means," Lee said. "But at the end of the day, we're actually seeing reflation — the good kind of rising prices in the U.S. I think it's bullish for capital spending and bullish for housing."
Consumer prices rose 0.4 percent last month, though they were unchanged for the 12 months through May. The Fed has indicated that it's likely to boost interest rates later this year.
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