Investors often wonder what to think when the stock market hits new all-time highs. Do they sell or do they chase the market higher? The bull market of the past seven years has now magically landed at new all-time highs in the Dow Jones Industrial Average and the S&P 500. Did you ever find less enthusiasm about the stock market at all-time highs? It is hard to imagine that the political pressure is going away, and didn’t all the economists and analyst warn that the unexpected Brexit news would wreck the economy and the markets?

24/7 Wall St. wanted to review how puzzling this is with other indicators, exchange traded funds and other outside indicators. The reality is that a lot of money fleeing negative interest rates and looking for yield may still be the main driving force. At some point that will bring a correction, but we have not bothered focusing on many index levels because the two main indexes hit all-time highs.

The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) hit an all-time high of $215.45 on July 13, but the S&P 500 index had risen over 7% in just 10 days from the post-Brexit lows.

Meanwhile, the Nasdaq and Nasdaq 100 index have not hit new highs. The Nasdaq itself was last seen at 5,015, compared to a 52-week high of $5,231.94. One reason is the lagging shares of Apple Inc. (NASDAQ: AAPL). It may not be fair to say that Tim Cook isn’t leading the company in the right direction, but it is fair to point out that Apple’s product refresh cycles are lengthening and that new iPad sizes, smaller iPhones and an unenthusiastic launch of the Apple Watch just aren’t driving much interest. At $97.15, Apple is down from a 52-week high of $132.97, and its consensus price target has fallen to $122.33.

Another weak force for the Nasdaq is that the biotech sector remains weak or muted after years of growth, with the presidential election and drug pricing pressure weighing. The SPDR S&P Biotech ETF (NYSEMKT: XBI) was last seen trading at $56.84, with a 52-week range of $44.16 to $91.11. If the SPDR S&P Biotech ETF being down almost 38% from its 52-week high does not signal weakness, then what does? At least there is a new list of the top biotechs with pipelines valued at close to zero.

Citigroup is warning investors that the likes of AT&T Inc. (NYSE: T) and other high-yield defensive dividends have begun to trade at a premium. Their take: AT&T (and Verizon) dividend chasing has just gone too far.

Gold and oil are sending odd signals. Gold rallied handily during the post-Brexit mess, to the point that gold holdings in ETFs were now larger than all but a few central banks. The SPDR Gold Trust (NYSEMKT: GLD) hit a recent high of $131.15, but it was last seen down at $128.25. Gold itself was attempting to break that $1,400 per ounce mark again but has since pulled back to $1,345 or so. Oil had recovered from under $30.00 back up to $50.00, but that also has pulled back. Remember how “the stock market follows oil” lasted for months and months? Crude was last seen trading down over 4% at $45.50 per barrel (for WTI).

American Water Works Co. Inc. (NYSE: AWK) reached a peak above $85.00 in recent days, but this has started pulling back as well. American Water Works may be in the 24/7 Wall St. 10 stocks to own for the decade, but the reality is that many analysts have been downgrading this water utility. The logic is a disconnect between investors wanting the safety of water and the real value of the investment.

The latest reading from Investors Intelligence showed a handy gain in bullish investors and a decrease in those expecting a correction. These may not be at extremes yet, but they are very frequently used as contrarian indicators.

Bonds yields tanked after the Brexit news broke, with the 10-year Treasury yield falling to under 1.35% from 1.58% before the Brexit news. Those yields had risen back up to over 1.50% after a poor 10-year Treasury auction on Tuesday, July 12. Still, a 30-year Treasury long-bond auction managed to help erase some of the prior day’s losses.

Standard & Poor’s sent us the following data for the current market valuation and expected earnings trends for the S&P 500 Index:

Aggregate second quarter 2016 S&P 500 earnings are estimated at $28.14 (EPS), an expected decline of 5.5% year-over-year and the fourth quarterly decline in a row. Only four of 10 S&P sectors are projected to have positive earnings growth: consumer discretionary (9.4%), industrials (6.6%), utilities (3.1%), and healthcare (3.1%) leading. The energy sector earnings once again is expected to post the largest decline in growth (at -81.8%), though the decline is an improvement from first quarter results. From a valuation perspective, the S&P 500 is trading at a big premium of 17.8 times forward 12 month earnings.

Merrill Lynch’s technical analysis team addressed the strength and key levels for this bull market, as follows:

The S&P 500 close above 2130.82 confirms the bull market from March 2009 as the second longest cyclical bull market. SPX follows improving breadth indicators & is breaking out. Upside counts: 2225, 2300 & 2420. Supports: 2074, 2000-1950. Many pre-Brexit patterns still exists today on EM, SXXP & UKX. See report for Net Tabs, OBOS & weekly relative ranks.

Investors capital flows are signaling that the wealthy investors and many institutional ones are holding vast amounts of cash rather than committing fully to stocks or bonds. Back in June the global investor cash holdings were 5.7%, according to Merrill Lynch data, but that is a high not seen since 2001.

At the end of June, there was a whopping $11.7 trillion in sovereign debt that came with negative interest rates. In July we have seen some unofficial data suggesting that it is now $13 billion with negative interest rates. That is being led by Japan, the core-EU nations and Switzerland.

The CBOE’s Volatility Index, the VISX (or the Fear Index), is back down at crazy levels — under 13.50, after having hit 25 during the Brexit. As this number climbs it means investors are worried, a contrarian indicator many investors use as a Buy signal. When it gets too low, it means that investors aren’t worried at all and are often too complacent. The iPath S&P 500 VIX ST Futures ETN (NYSEMKT: VXX) tracks this, but keep in mind that the ETF has done a poor job of avoiding tracking error and erosion over the course of a year when you compare performance. It also implies with a low VIX that is now dirt cheap to buy put options as a hedge against unknown downside.

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A BDO fresh report from July is talking down the IPO market and talking down the future value of the so-called venture capital unicorn companies with valuations of $1 billion or more. BDO showed that the number of U.S. initial public offerings nosedived during the first six months of 2016, down by approximately 60% and with money raised down 66% versus a year ago. BDO warned about unicorn valuations:

A majority (52%) of capital markets executives at leading investment banks are predicting a serious correction in the valuations of these so-called “unicorns”.  Last year, in order to gain additional funding, some of these businesses went public at valuations considerably below their most recent round of private financing.  An overwhelming majority (85%) of bankers believe there will more of these type of offerings moving forward.

Anyhow, the point here is that the bond market is trying to find some sort of equilibrium at a time when currency moves and the flight to and from negative interest rates is taking place. How long equities will remain a haven into slowing growth remains up for debate. Maybe things will revolve back to watching gold and oil again.

So much for “Sell in May and Go Away!” in 2016. This market has been surprising on more fronts than it has not been. We keep hearing about the “new normal” being a weaker normal. So far we just aren’t seeing it, and investors still buy any and every pullback. Stay tuned.

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