Barry Ritholz wrote last week that he was watching the Hang Seng Index closely for signs that risk aversion is rising. Should the index violate support at 22,600, then it would be a sign to get more defensive in their portfolios.
Other measures of risk aversion, such as the ratio of US Consumer Discretionary stocks (XLY) to Consumer Staples (XLP) is looking bullish.
The ratio of the Morgan Stanley Cyclical Index to the market, another indicator of growth expectations, is testing a level of relative resistance but remains in a relative uptrend.
If the Hang Seng were to break down, it is not necessarily a Sign of the Apocalypse but perhaps an indication of a minor pullback. Until we get a bearish consensus on these other indicators of investor risk aversion, I would be inclined to give the bulls the benefit of the doubt in the intermediate term.