A couple of signs investors want to be aware of as we digest a 40 percent move upwards in stocks in a 3 month period - valuation alone seems risky.

The S&P is up 39 percent from March 9th to June 12th. Financials are up 100 percent and industrials are up 54 percent. In addition, TrimTabs.com reports that companies and corporate insiders are huge net sellers of shares. Since the start of May, new offerings of $98.5 billion have been 4.6 times higher than the $21.4 billion in new cash takeovers and new stock buybacks. Also, insider selling of $3.9 billion has been 6-times higher than the $650 million in insider buying.

Also as far as the fundamentals of the economy, TrimTabs CEO Charles Biderman reports very few signals that the downturn bottoming, pointing to income tax withholdings plummeting 4.5% y-o-y, which is even steeper than the drop of 4.2% y-o-y in the past three months. He expects declines in withholdings to accelerate this summer because tax refund season is over, 30-year fixed mortgage rates have shot up to 5.6%, and gas prices are at or near $3 per gallon in many areas of the country. Most economists are expecting the unemployment rate to worsen.

On the bright side, the steep decline seems to have slowed and there is still money on the sidelines. TrimTabs says individuals have yet to buy into the rally, indicating the potential of their participation to support the market- which is somewhat bullish from a contrarian perspective. Since the start of May, U.S. equity funds have taken in a modest $7.1 billion even as the average U.S. equity fund has gained 8.6% in price. This week, expect $2.0 billion daily

in new offerings and $100 million daily in net insider selling. Biderman says therefore, corporate selling should total $2.1 billion daily, which would be $1.8 billion daily higher than actual corporate buying. Ashraf Laidi mentions recent dollar rhetoric from Russia’s finance minister as well as increased scrutiny over the durability of the recent rally in world stocks leading to a simultaneous retreat in risk appetite, whose currency implications mean broad gains in the dollar and the yen.

Finally, I have been traveling a lot lately and it is amazing to me how much concern there is on the ground over President Obama’s economic policies. People are concerned higher taxes and the attack on business will slow or even worse, reverse any beginning of an economic revival.

This is something to watch closely.

• Watch: My Interviews With Russia's President Dmitry Medvedev

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