When bad economic news stops being good stock market news — dangers ahead!

By all appearances, the US stock market rally is healthy and gathering momentum, drawing increasing amounts of money from investors (more money is pouring into funds) while cash held in funds is also falling rapidly (see Chart 1). The closely watched Standard & Poor’s 500 index has just clinched its 31st record close so far this year while the Nasdaq Composite Index, too, has been hitting consecutive fresh all-time highs.