Spending a day away from the market was not enough for me to regain my senses as I remain cautious on the near term prospects of the market. Many of the things I am reading and hearing are the polar opposite of the end of the world stories I was hearing during the Fall. Valuations are reasonable and a very strong seasonal period starts in two weeks so I am not willing to bet against the market. However, I am not willing to take market risk as I believe the risk/reward is poor.
One of the most twisted pieces of logic I have been hearing is that the market won't correct or pull back because we are in a bull market. While I have only been investing for three market cycles I have yet to experience a bull market or studied one where there have been no pullbacks or corrections.
In a flashback to 1999, the news that Zynga is opening a website sent the stock up by 15%. Retail investors keep buying Apple because of the hot tip that an iPad 3 is coming out. Imagine their jubilation when they realize its certain to be followed by an iPad 4. Strategists are once again raising their price targets on the S&P 500 after lowering them during the Fall. All the while insiders are dumping stock hand over fist and bankers are pushing out as much supply as people will buy. No thank you.