SHOW ME YOUR CONVICTION

Let's put a few things in perspective.

As the graph below from the WSJ shows investors are in the market. But it's heavily skewed toward defensives issues.

If that makes you feel comfortable, it reminds us of the old big toe dip in the bath water, not a plunge based on confidence.

Caterpillar, the huge machinery firm, came out with weak earnings. The stock closed at $82 and change a little over four bucks from its 52 week low and roughly $30 off its 52 week high. 

The company manufactures construction and mining equipment. The mining sector has been hard hit not the least of which is owing to the drop in metal prices, commodities and the Chinese slowdown.

Energy prices are weak. Housing's being propped up by the Fed and the MSM cheerleaders.  People want to believe. Show me your conviction. They're paying up for that defense.

A while back we mentioned the smell test. We also mentioned taking what the market gives. Well, this graph is telling you what most investors don't like. 

If this is another off-to-the-races bull market based on a solid recovery, how far can it get without energy, materials and the like?

And when do you want to buy them?