It’s interesting how many financial pundits are saying that we are still in a bull market because right now I can’t find much to justify it. In fact, there are some reasons to suspect that we may be in the initial phase of a major down-turn. Why? Consider the following:

1. Despite the fact that the major averages have been holding up fairly well, the VIX (volatility index) has jumped to bearish levels. (Anything above 15 is considered bearish and values over 20 are considered very bearish.)

2. Gold has been moving back up in spite of the fact that most financial experts are saying that gold has more room to fall. Some are even predicting a slide to $700. Historically, people buy gold for two main reasons–as a hedge against inflation and as a hedge against rising socio-economic uncertainty. There’s little inflation to be found anywhere in the world so the first reason is out, leaving us to think that perhaps the so-called "smart money" is anticipating a period of global economic turmoil, or stagnation at the very least.

3. The US dollar keeps pushing higher. A year ago, who would have thought that? What this could mean is that the greenback is not going the way of the dodo in terms of being pushed out as the world’s reserve currency as many pundits have argued. Despite the fact that the US economy is not going gangbusters, it’s still doing better than most major economies. China’s growth rate has been decelerating at a fast clip and I’m not sure if one can really believe the "official" growth rate as forecast by the Chinese government. (Copper prices have long been used as an indirect measure of Chinese growth and today the Copper etn (JJC) closed at a level not seen since mid-2009. The price of this tracking stock has been declining steadily since its peak in early 2011 and there doesn’t appear to be a bottom in sight.)

As a corollary to this, treasuries and investment grade corporate bonds have been soaring. The Long-Term Treasury etf (TLT) has risen 30% since the beginning of 2014. Compare that with the S&P 500 which has risen 10% in that time. Clearly, investors are preferring the safety of bonds to the risk of owning stocks. Moreover, stocks have become richly valued–the average price/earnings ratio (P/E) of the S&P 500 is currently hovering just below 20. That’s about 30% above its average historic level of 15.

4. Although employment has been rising, wages have been stagnating since the recession. This means that people have less money to spend on goods and services, essentially inhibiting growth. And what with the baby boomers retiring, spending will further decelerate (except for possibly in the rv, mobile home, and cruise markets). It’s going to be tough to expect the Millenials to pick up the slack since many of them are saddled with exorbitant student debt. This scenario does not bode well for further appreciation in real-estate, either; in fact, we could see prices fall quite a bit, especially in the upper echelons of the housing market which the boomers will want to sell and the Millenials can’t afford.

In short, as there doesn’t seem to be a lot of fuel to propel the stock market higher, moving to the sidelines could be a very prudent move.

Today’s market highlights: Outside of some breakouts in biotechs, one of the few bright spots was in precious metals. The Gold Miner etf (GDX) has been in rally mode since the beginning of November and today it pushed above minor resistance at $118. (Next stop is major resistance in the $120 area.) Silver has been a little late to this party but today’s move in some of the junior silver miners (SSRI, AG, EXK) suggest that it, too, could be in the initial phase of a turn-around. A break above $16.50 resistance in the Silver etf (SLV) would likely fuel a continued rally in the white metal.