Mark Steele, BMO Capital Markets' head of quantitative and technical research, offers this unequivocal recommendation in the title of his report: "Go to Cash -- In Plain English." In a version prepared for non-technical readers, he offers this cogent summary:
"We advocate switching out of equity positions and going to cash. The European sovereign debt crisis appears to be nowhere near over. The global credit environment is worsening. Cost of capital is going up and availability is going down. There are large gaps between where the credit market prices risks and where the equity market is priced. Equity is lagging the deterioration in credit conditions. Moves in currency, equity and commodity markets are mirroring the moves in the credit market. Global growth, in a credit-constrained environment, will slow. Profits will be squeezed by the higher cost of capital."
I agree for the most part. I haven't felt comfortable about going long this market in some time. It's a form of being trigger-shy. Or constipated. But it feels nice to be 100% cash rather than being break-even with a position in AAPL and another in VXX. That's a bit too much work.