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After hitting a record close last week the market is showing some warning signs, which is to be expected. You don’t typically break through an important resistance point without testing it and re-testing it so some volatility around a record high is normal. We are also slightly concerned that small and mid cap stocks have drastically underperformed the S&P 500 over the past two days. In the larger scheme of things two days is pretty insignificant, and as I write this the pre markets are showing some strength in small caps, but this is something to be monitored as it could be the warning sign of investors shifting to a more “risk off” stance.
On a broader basis traditional asset allocators have had a tough year. While the S&P 500 has had a great year, other asset classes have not. Below is a chart of some of the usual components of a traditional asset allocation portfolio and how they have done this year:
YTD Return as of 4/2/13
iShares Barclays Aggregate Bond ETF (AGG)