Risk Appetite:

So far so good in regards with the Nasdaq not backing off hard at the very round 10000 number, and give it credit for losing ground just one day in June thus far. We often hear about “risk on” or “risk off”, and the former applies in many different ways. Technology acting well is a clear sign of a healthy risk appetite, and with the group easily the best major S&P sector performer in 2019 by a wide margin (via the XLK), and well in front again in 2020 is a positive sign. Curiously the behavior of the Russell 2000 has been an indicator of risk, and today with the Nasdaq up 1%, the small cap benchmark fell in the 2% neighborhood for the second straight session. Yet another gauge of risk is the VIX, and the chart below shows this instrument is at an inflection point. In my opinion it needs to hold its upward sloping 200 day SMA. The Nasdaq continues to climb the wall of worry, with the 10000 number, the other 10 S&P sectors that would love to grab the top spot, and other factors. New all time highs are to be embraced, not cause for consternation. How long will it last? Most likely a lot longer than we think.

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