Stocks moved higher last week despite tepid economic news and continuing political pageantry.
Despite the market's continuing success, analysts have been calling a top. Forecasting the end of the bull market. With pundits espousing the overpriced nature of equities in an effort to generate broadcast opportunities. If only these media hounds realized the error of their ways.
This bull market has not yet reached its zenith.
On May 17th, the Dow Jones Industrial Average dropped 370 points. The move wasn't that deep on paper. Less than a two percent loss. But technically, the drop was two standard deviations beyond normal. And investors reacted by showing their hands. Devolving into various degrees of panic. Displaying the type of fear that is never present at the apex of equity bulls.

Jason Goepfert at SentimenTrader reported that, "There was a monster spike in [panic-based exchange-traded fund ("ETF")] volume, accounting for nearly eight percent of NYSE volume, by far the largest ever."
Jason defines a "panic-based ETF" as one of the following:
1. An inverse ETF
2. A volatility-based ETF
Typically, these investments perform well when stocks drop. Accordingly, when investors fear big downside risk or major volatility, they stampede into these funds. Which is exactly what they did in May. On the 17th, panic-based ETFs were traded in record amounts. Translation? Investors remain nervous. Not entirely trusting this bull market.
All of which, from a contrarian's vantage point, spells good things.
Typically, bull-market tops are comprised of contagious optimism. Investors have lost their fears. So they dive in. Expending whatever investment capital remaining on the sidelines. Leaving little to nothing to continue fanning the market's flames.
We have not reached that point. And the renowned value investor Jeremy Grantham agrees.
In a recent speech at the Morningstar Investment Conference, Grantham said many stock valuation indicators are approaching "bubble land." Yet, he's not getting bearish. "No bubble has ever broken until individuals pour money into the market," he said. Further noting that many investors pulled money from the market following the financial crisis. And many are still avoiding stocks today.
Grantham also explained that the last round of Federal Reserve rate hikes (2004 to 2006) didn't end the equity bull market. Contending that the market is headed higher, he did admit it has become more difficult to find good places to invest.
He reports that globalization, increasingly "monopolistic" U.S. companies, and super-low interest rates have pushed corporate profit margins above long-term averages. Which in turn has pushed valuations to new highs.
That said, Grantham argues these trends are likely to continue for years. Perhaps decades. Translating to higher valuations throughout.
Additionally, market breadth has improved, of late. With more than 70 percent of S&P 500 shares trading above their 200-day moving averages. Which typifies increasing market momentum.
Some weeks ago, the discussion focused on how the FANG stocks (Facebook, Apple, Netflix and Google) were carrying the index. Yet recently, the S&P 500 equal-weighted index -- which equal weights all 500 stocks as opposed to the S&P's traditional market-cap weightings -- has been closing the gap. Which means that the rally has been broad based. And not concentrated among a few high-achieving companies.
Just more good news for those reading the tea leaves.
Changing topics, America's Ivory Towers have been taken to task for the skills being imparted upon America's youth. Relative to the impact they're supposed to be having.
Each year, Freshmen at 200 U.S. colleges take a test that measures improvements in the collective ability to think and reason. Results have been discouraging.
The College Learning Assessment Plus (CLA+) revealed that at more than half of the schools tested, at least a third of the students were unable to make a cohesive argument. Or interpret the quality of evidence in a document. Or even analyze data on a spreadsheet.
Some of our most prestigious universities graduated students who, on average, saw no enhancement in their critical thinking skills over the course of a four-year education.
Those troubling results are underscored by a recent survey by Payscale Inc. revealing that, according to employers, 50 percent of college graduates are not ready for the workplace. Employer's top complaint? Poor critical reasoning skills. Students may spend four years in college. But little is being done to make them better thinkers and problem solvers.
While the role of a diploma in one's life preparations has been on the ascendancy, the merits of those increasingly expensive documents must be questioned.
Finally, a glance at the weekend's tragic events in London.
Having avoided mass casualty terror attacks for 12 years, the U.K. has now suffered three in rapid succession. Saturday's deadly rampage in London represented the third attack in three months. ISIS has taken credit for the attack that killed seven. And London is on lock down.
My brother in law is from Manchester. Three weeks ago, he saw 22 innocent lives senselessly claimed at a concert in his hometown. The rising number of these soft-target attacks is deeply disturbing. And could portend troubling signs of things to come.
Our thoughts and prayers go out to the victims and their families. Those in the U.K., and other similar attacks throughout the world. Unfortunately, such thoughts and prayers seem to be going out with increasing frequency.
Weekly Results
Major indices finished higher last week. The DJIA gained 0.60 percent. The S&P 500 rose 0.96 percent. And the Nasdaq climbed 1.54 percent. 10-year Treasury bond yields fell 4.18 percent. While gold futures closed up 0.72 percent.