Stocks finished the week on a positive note, with the Dow (INDEX: ^DJI) and the broader S&P 500 (INDEX: ^GSPC) gaining 0.4% and 0.5%, respectively. However, this week marks the Dow's fourth consecutive weekly decline; the S&P 500 also lost ground this week, as it has done in three of the past four weeks. The S&P 500 is now 7.2% below the high it achieved on September 14th.

The macro view: Two days ago, I highlighted a news item in this column according to which the iShares iBoxx High Yield Corporate Bond Fund (ASE: HYG) had suffered its largest daily redemption in the fund's 5-year history. Today, PIMCO's Bill Gross, who manages the PIMCO Total Return Fund, the world's largest bond fund, tweeted:

Gross: Stocks are down because taxes on Capital are going up. HY Bond liquidity is declining.

— PIMCO (@PIMCO) November 16, 2012

Junk bonds have had a great run in this yield-starved environment. At the end of October, the trailing 10-year inflation-adjusted return on the BofA Merrill Lynch US High Yield Master II Index was 8.3%. The last time the trailing 10-year return was higher than that was near the top of the previous cycle in January 2001, when it reached 8.7%. Personally, I sold my position in the HYG ETF from the model asset allocation portfolio I maintain, at the end of August.


The micro view: Dow component JPMorgan Chase (NYS: JPM) is taking a $300-million slap on the wrist to settle charges by federal regulators relating to the sale of mortgage-backed securities during the credit bubble era. Per the standard agreement, JPMorgan will neither admit to, nor deny, wrongdoing; the charges pertained to both Bear Stearns, which JPMorgan acquired in 2008, and to JPMorgan's own activities prior to that acquisition. Ho hum.

While I don't condone the behavior that was the object of this settlement, JPMorgan remains one of the best-run banks, with some of the highest business standards in the industry. I don't think one need feel guilty about owning their shares. Furthermore, they look like a pretty good risk-adjusted opportunity right now. To get a comprehensive assessment of the upside, click here to receive our premium report, which includes 12 months of ongoing coverage.

The article Has This Market Already Peaked? originally appeared on Fool.com.

Alex Dumortier, CFA has no positions in the stocks mentioned above; you can follow him @longrunreturns. The Motley Fool owns shares of JPMorgan Chase & Co. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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