Equity Market Outlook
After a mixed March (S&P500 +0.84%, Russell 2000 -0.68%, Nasdaq Composite -2.53%), the S&P 500 rallied to another historic high on April 4th. Unfortunately, this new high was not confirmed by the broader, secondary indices -- the Nasdaq Composite and the Russell 2000 -- and the stock market sold off sharply the following week. Most of the aggressive selling was in the speculative, momentum sectors of the market: small cap, biotech, technology and social media. While the selling has abated, we believe this sharp sell-off in the market's leading sectors is another sign confirming our general thesis that overvalued risk assets are vulnerable as the Fed reduces the level of monetary accommodation (tapers QE) and the global economy is not improving as robustly as investors had expected.