Risk-taking is on the rise

Yesterday I saw an article in The Wall Street Journal under the title "Rally Is a Tale of Wounded Stocks. The main issue in the article is, that it's the lower-quality, smaller sized companies that has rally the most since the February low. That means risk-taking is on the rise and that the current rally is a very weak one.



Compared to the NFIB-Index which fell in February til index 88 from 89.3 in January, the willingness to "pick-up" the small lower-quality names doesn't make sense to me.
I know that the NFIB-Index can't be compared directly to the small S&P 500 companies, but I'm sure that they are feeling the heat too. See this article below written by Bruce Phillips about "Small Business Sees Grim Future I do think, that it nails how many of these companies feel too.

Small Business Sees Grim Future — With Good Reason
by Bruce Phillips Monday Mar 15, 2010
For most of the past 15 months, the Index of Small Business Optimism from the National Federation of Independent Business has been at or near historically low levels. Sadly, the index— which measures, among other things, job creation, current and future sales, future sales, profits and financing opportunities — paints a pretty bleak picture, and rightfully so.
Main Street has been left behind as corporate America — aided in some instances by government rescue money — continues to recover. It seems that as corporate profits recover, large firms are doing little to reduce unemployment and increase consumer spending
Small firms, meanwhile, continue to struggle. On the one hand, sales are scarce in many retail sectors on Main Street. Look at the many small eateries, apparel, and novelty stores disappearing from downtown areas and suburbs. Slack sales are generally the reason.

Looking at the Retail Index below. The best count is that the decline from February the 20, 2007 to November 21, 2008 was a simple A-B-C Zig-Zag correction, which I count as wave [A]. The ongoing rally is best counted as a A-B-C correction too, but in this case a Irregular flat (nice alternation), which will be counted as wave [B] calling for a decline to the low of wave [A] in wave [C] at least in a flat or lower if it becomes a irregular flat.

Back to the ongoing wave [B] we are currently in wave 5 of C. Wave 3 was smaller than wave 1, which limits the length of wave 5 to max. 503.44. But as wave 1 and 3 are almost equal in length I would expect wave 5 to be smaller. The first obvious target would be 38.2% of wave 1 through 3, which would give a target at close to 461 A clear break above 461 would make the 479 area the next target-area and then the 503.44 as the absolute maximum.

As I said, I do prefer a top near the 461 area.