What about the current bull market? It’s been running for more than five years now, and that alone has some questioning how much longer it can go on. Don’t look for answers in the market’s performance this week. The S&P 500 dipped just 0.1% to 1,960.97, while the Dow Jones Industrial Average fell 0.6% to 16,851.84. The Nasdaq Composite gained 0.7% to 4,397.93 and the small-company Russell 2000 ticked up 0.1% to 1,189.50. Make sense of that jumble.

Investech Research’s Jim Stack expresses his discomfort with the five-year bull market:

…with the market hitting new all-time highs almost daily, the majority of dark clouds have seemingly disappeared from the investment horizon. Yet this is when we tend to become most uncomfortable. Not bearish – just uncomfortable. It’s not that we disagree with the evidence – which supports a bullish outlook. We simply know that, historically, market tops are accompanied by maximum levels of bullish consensus. One can’t base their investment decisions solely on "sentiment" or "complacency" – but one also shouldn’t ignore such extremes when they start to appear.

Societe Generale’s Albert Edwards extols the life of a Bear:

I’ve long felt being an equity bear is more like a vocation, especially as I have now been underweight equities for 17½ years. Being an equity bear is about as popular as being an estate agent or indeed even worse – a politician. But I believe we remain trapped in a secular valuation bear market and the Ice Age theme will continue to dominate in the near term. The flip side of this is that I remain a bull of long government bonds. As my colleague Andrew Lapthorne points out, the nature of the beast is that I am wrong 90% of the time as equities outperform bonds, only to be correct in the long term as many years of equity outperformance are savagely unwound in a matter of months.

JPMorgan’s Arjun Mehra and team wrote think there could be some short-term pain ahead after the S&P 500 experienced a "key reversal:"

In general terms, a key reversal occurs when a security completely changes its recent pattern during the course of a trading day. Specifically, for a day to be classified as a key reversal day in an up-trending market, 2 things need to happen: 1) the security must trend higher and take out the previous all-time highs, and 3) the direction must then reverse with the closing tick falling below the previous day’s low price. A reversal day can also occur in a down-trending market, with the exact opposite direction in each step mentioned above.

We looked at price history for the S&P 500 since the beginning of 2000 and discovered that key reversal days in up-trending markets (like the one we are in the midst of currently) are rare and have only occurred in 5 total instances, with June 24, 2014, being the most recent occurrence. The data shows that the S&P 500 underperformed immediately following the triggering of each of these days. As such, we think it is prudent to buy short-dated puts/ put spreads on the index to hedge against any potential downside in the coming few days, particularly with implied volatility close to cycle lows.

Undervalued Oil Giant Chevron Could Rise 30% Years of investment in production should pay off in the coming quarters, rewarding investors who buy low.

Oil giant Chevron has spent the past few years investing in its future, which has created a powerful opportunity for investors. A capital-spending blitz has depressed the company's earnings in the short term, keeping a lid on the share price. Meanwhile, the payoff will be greater profits down the road to share with investors wise enough to get in now.

Chevron (ticker: CVX ) is poised for a resurgence of profits in late 2014 and beyond as it wraps up years of successful exploration and large project construction amid an environment of high oil prices.

"Chevron offers by far the best growth prospects in the integrated oil sector with visibility through 2020, and the stock is still reasonably valued, especially relative to Exxon," says Jefferies analyst Jason Gammel. "The dividend is very sustainable and capable of growing in the mid- to high-single digits on an annual basis." Shares yield 3.2%.

At 11.7 times forward earnings, Chevron is significantly cheaper than ExxonMobil ( XOM ) and ConocoPhillips ( COP ), which both trade well above 13 times forward, even as Gammel estimates Chevron's annual cumulative production growth rate as high as 5.5% through the end of the decade, well ahead of the 1% to 2% industry average.

Chevron's stock has been held back in part by concerns over its big capital spending program. However, investment in exploration will benefit shareholders for years to come, and two major Australian liquefied natural gas projects, Gorgon and Wheatstone, are set to come online in the next two years: At full capacity, Gorgon alone could generate around $1.30 in annual earnings. (Chevron earned $11.09 a share in 2013.)

Jim Kee, South Texas Money Management's chief economist, says that Chevron is showing "great discipline" in spending wisely while continually rewarding shareholders. Chevron is "reinvesting in projects that will increase the value of the company but depressing earnings in the short term — that creates an opportunity for investors to jump in and buy the stock, and now is the perfect time to do that."

Some investors may be hesitant to buy now, but Kee argues that "Most of its spending will start to generate cash flow over the next few years, and the market hasn't priced that in yet. So the return on investment will go up, the market will start to reward the stock, and people who own the stock now will see a good 30% return." After a dip in 2014, Chevron is expected to return to mid-single-digit earnings-per-share growth in 2015 and earn $12.31 a share in 2016.

Moreover, while Chevron is expanding its natural gas production, it is still one of the "oiliest" majors: More of its earnings come from oil, which is more stable in price than natural gas — and its contracts mean that much of its LNG output is also tied to oil prices.

"We believe that Chevron is the most levered of the majors to higher oil prices…and oil is well supported, not just because of [recent instability] in Iraq, but as the actual physical balances of oil are very tight, inventories are very low," says Brian Bradshaw, portfolio manager of the BP Capital TwinLine Energy Fund, which counts Chevron among its top five holdings.

Bradshaw also notes that Chevron is one of the few majors aggressively investing in its business at the moment, with the rest of the group focusing on shareholder returns. With both dividends and buybacks, Chevron's total yield is just under 5%, while Exxon is closer to 6%.

Yet receiving a slightly smaller yield now allows Chevron shareholders to get the better-earning company in the long run. "The money they are spending now shows up in better production volumes and better margins in the years to come -- because of rising oil prices and cost controls -- so you end up with a company that [will ultimately] have higher dividends and stock buybacks, and Chevron's return on capital is already one of the best in the business," says Bradshaw.

To be sure, investors have to be comfortable with execution risk before buying the stock. Despite its seasoned management team and disciplined approach, Chevron has to watch costs carefully -- a difficult task with big projects like those in Australia. And as with any major integrated oil company, some of its assets are in riskier regions, in geopolitical terms. Finally, a crash in oil prices would also hurt the stock.

Yet any missteps are likely to be minor and short term, and with large, valuable assets in stable places such as the U.S. and Australia, Chevron isn't as exposed to international politics as some peers. Nor does the company draw any of its earnings from Iraq, which, along with other factors, is working to keep oil prices up.

Chevron  (CVX)

Stock Price: $130.92 52-Week High: $133.57 52-Week Low: $109.27 Market Value: $250 billion Est. 2014 EPS:$10.86 Fwd P/E: 11.7 Est. Long-Term EPS Growth:*5.50% Est. ('14/'13) EPS Growth: -2% Revenue (trailing 12 months):$208 billion Dividend Yield: 3.30% CEO: John Watson Headquarters:San Ramon, Calif. * Based on analyst estimates looking ahead three to five years. Sources:  Barron's, Thomson Reuters, Yahoo Finance

Weekly Market Update: Summer Doldrums Arrive Early

- The second quarter still has one session left to go on Monday, however there was very little quarter-end repositioning driving trading volumes or volatility any higher this week. The final reading of first quarter US GDP came in much lower at -2.9%, however markets ignored this well-trodden story to concentrate on more recent, more positive numbers: the May Markit manufacturing PMI reading pushed out to 61, its highest level since May 2010; May new home sales surged 18.6% from April to an adjusted rate of 504K, the highest level since 2008; and May core PCE at 1.5%. Similarly positive data were seen out of China and Japan, while European indicators held steady at a low level of growth and inflation. The S&P500 made an all-time intraday high on Tuesday and then edged lower, while European bourses moved lower all week. For the week, the DJIA dropped 0.6%, the S&P500 fell 0.1% and the Nasdaq gained 0.7.

- The annualized May core PCE, the Fed's preferred measure of inflation, grew 1.5%, right in line with consensus expectations. This is the highest rate of growth in the measure since February 2013, and the overall reaction to the data among analysts and the Fed was very measured this week. The headline PCE was a bit higher, at 1.8%. Fed dove Bullard said PCE inflation would not get above 2% until 2015 but warned that the Fed is much closer to achieving its goals and the economy is doing much better than most people realize. While Bullard also reiterated his view that rate hikes would not be appropriate until the first quarter of 2015, Bullard's firm tone helped force equity markets lower on Thursday morning. Fed hawk Lacker said the recent inflation data was not just "noise" and that inflation measures would head higher this year. Lacker also warned it would be a mistake to allow inflation to get out of control before the Fed started raising rates. Recall that last week, Fed Chair Yellen said "...recent readings on, for example, the CPI index have been a bit on the high side, but I think the data we're seeing is noisy."

- The final revision of the weather-impacted US first quarter GDP missed expectations and sank much lower, to -2.9% from the -1.0% preliminary figure. This was the fastest rate of decline since the Great Recession and the largest drop recorded since the end of World War II that wasn't part of an official recession. However, nearly every component of the final reading was very modestly adjusted with the exception of imports and exports (which more or less cancelled each other out), and the services PCE, which was revised to +1.5% from +4.3% in the preliminary data, driven entirely by updated estimates of health care spending. The feds had assumed medical services would be up sharply due to expanded access under the ACA, but the latest quarterly services survey showed few signs of acceleration. After the data, Barclays adjusted its call to +2.9% from +4% in its prior view, to reflect a more modest rebound in Q2 consumption growth. TD Ameritrade cut its Q2 GDP view to +3.0% from +3.6% prior.

- Oil prices spiked higher on Tuesday on reports the Obama administration had cleared the way for the first exports of US crude oil in 40 years. Federal officials informed two energy firms - Pioneer Natural Resources and Enterprise Products Partners - they can legally export ultra-light oil condensate, which is a product of shale drilling. The front-month WTI crude contract traded as high as $107.50 before the Commerce Department clarified that there had been no broad change in policy. Commerce said that the two companies were granted permission to export shale condensate only after it had been run through a distillation tower to become a petroleum product and only because of a large oversupply of condensate, clarifying that the move had no larger implications for crude exports. Nevertheless, refiners tanked on Wednesday, with Valero down 10% or so on the week.

- On Friday Ukraine signed the historic free-trade agreement with the European Union that has been at the heart of months of violence and upheaval in the country, drawing an immediate threat of "grave consequences" from Russia. Ukraine President Poroshenko declared a unilateral ceasefire for the week, however hostilities continued, with both sides exchanging fire on several occasions. The tentative ceasefire is expected to extend through Monday to allow of an attempt at peace talks. Western powers reiterated they stand ready to impose more sanctions if Russia fails to make a good faith effort de-escalate the tensions and return full control of Ukraine's border to the Kiev government.

- The US Supreme Court ruled against Barry Diller's Aereo streaming television service, calling it a broad violation of broadcaster copyrights. The sweeping and definitive ruling was split 6 to 3, and the majority opinion went out of its way to call out Aereo as the equivalent of a cable company, not merely an equipment provider. They also emphasized that the ruling does not endanger other technologies, including cloud computing technology. Mr. Diller said the ruling was the end of the road for Aereo, calling the ruling a big loss for consumers.

- In earnings, shares of Nike gained ground on impressive fourth quarter numbers, beating on the top and bottom line. Futures orders were up 11%, while even China - previously a soft spot - appears to have made a fully recovery from its inventory adjustment with a 4% rise in sales. Walgreen missed bottom-line expectations in its third quarter, but bevenue was up 6% y/y and met consensus views while Rx comps were up 6.3%. Walgreen also said it was considering reincorporating in Switzerland for tax reasons as part of its combination with Alliance Boots. Monsanto beat earnings expectations in its third quarter results and authorized a big new share buyback program. Note that earnings were down 5% y/y and revenue missed expectations, dragged lower by a 16% y/y decline in sales of genetically-engineered corn seeds. Homebuilders Lennar and KB Homes reported very strong quarterly results, with robust gains in new home sales and strong growth in backlogs.

- In M&A news, France's Alstom accepted General Electric's $13.5 billion offer to acquire the firm's power generation and grid businesses, with the additional caveat that GE enter three JVs with Alstom for grid infrastructure, renewable power equipment and nuclear power. The deal comes after the French government got an option to buy as much as 20% of Alstom from Bouygues following the closing of the deal, giving the government the guarantee it needed that Alstom will remain a French firm. Oracle reached a deal to acquire Micros Systems for $68/share in cash, in a total deal valued at $5.3B. This is the company's biggest buy since acquiring Sun Microsystems for $7.4 billion back in 2009. Midwest utilities Wisconsin Energy and Integrys Energy entered an all-stock merger valued at $9.1 billion.

- FX markets remained locked in tight ranges for yet another week as volatility declined even further. Analysts noted as long as US bond yields were in retreat and the US yield curve continued its bullish steepening, the greenback should stay offered, pushing volatility even lower and keeping the carry trade in play. Volatility in the EUR/USD pair matched all-time lows at 4.55%. GBP/USD saw a little profit-taking after failing to close above the pivotal 1.7050 weekly chart point. USD/JPY slid lower, dropping below its 200-day moving average to end the week around 101.34 largely due to US rates. Key support is at 100.70 and could ignite downside momentum if broken.

- China HSBC flash manufacturing PMI for June returned to expansionary territory for the first time in six months, signaling the "targeted mini-stimulus" measures orchestrated by policymakers are starting to gain some traction. The data showed an upward inflection in input prices and improvement in the employment component, although growth in new export orders slowed. HSBC chief China economist said he expects continued accommodative policy until the recovery is sustained. China Beige Book assessment of Q2 was more measured, indicating fewer companies had access to credit amid weakening investment environment. Shanghai Composite ended the week up 0.5%.

- Trading in Tokyo was decidedly more bearish as Nikkei225 fell 1.7%, weighed down by firmer Yen and even more fodder for the BOJ to stick to its guns on policy. May unemployment rate fell to a 17-year low of 3.5%, while job-to-applicant ratio hit a 22-year high of 1.09x. Inflation figures also maintained their upward trend, with core Japan-wide CPI reaching its highest point since 1982. Japan PM Abe formally unveiled his "3rd arrow" plans early in the week, announcing plans to cut the corporate tax rate from current 35%+ to below 30% over the next few years, enact portfolio management reforms for pension funds, and revise the tax system with intent on promoting the number of women in the workforce.