Good morning traders. Morning thoughts today from Adam Grimes at The Macro Report:
 
For several weeks, we have been postulating that leadership would emerge in Energy and Technology, and this seems to be true, for the time being. Current laggards are defensive names in Staples, Healthcare, and Utilities, which is to be expected on a rally. Also to be expected is a contraction in volatility, and the market has not disappointed in that regard either. Twenty day historical volatility in the SPX is currently 10.7%; as dramatic as the weakness in the VIX seems to be (closed yesterday 18.52), the implied/historical volatility ratio appears fairly priced in SPX.
We do find it difficult to increase exposure at these levels, though it is possible a pullback in the next several weeks could offer an opportune spot to do so. When we first made our bullish call in mid-summer, our end of year target was 1,220 on the Cash S&P, which was hit in yesterday’s trading. This certainly is not a firm line, but it is important to remember that the S&P has had an approximately 160 point advance without a significant pullback, which may make the market increasingly vulnerable to a short-term correction. Regardless, weakness in equities is to be bought until further notice as the risk factors clearly favor further upside.