Invesco S&P 500 Equal Weight ETF (RSP)

* I believe we have seen the high in most averages for the year. * Risks are underappreciated. * Downside market risk currently dwarfs upside reward — perhaps materially so… What follows is a combination of Diary posts and communications to my Limited Partners at Seabreeze: I remain net short (about 15%) in exposure. Given that …

I remain of the view that equities are overvalued — perhaps materially so. I also remain of the view that, given the market structure dynamic and continued optimism on the part of most market participants (“the buy on the dip mentality continues uninterrupted”) that a sharp and extended market decline is unlikely (but not improbable). …

* Equities are not broadening out * Several time-tested valuation models point to downside risk dwarfing upside reward… Yesterday I quoted from portions of The Divine Ms M’s column in which she delivered an important message that the market WAS NOT BROADENING OUT (contrary to those in the business media who have said the opposite). …

* The McClellan Index (NYSI) is faltering, the Mid Cap Index ($MDY) is weakening, the Russell Index ($IWM) is not “crowing” nor is the equal weighted S and P Index ($RSP) participating in the markets’ recent advance… Contrary to the near universally bullish narrative of most of the “talking heads” in the business media, the market is …

$SPY +0.44% $QQQ +0.26% $IWM -0.58% $RSP -0.04% Position: Short SPY (M)