S&P
500 was up 2% to 1225 today, Tuesday.
I
continue to be bullish as does the Navigate the Stock Market system.
To
keep us from getting too carried away, here are some comments from John Hussman,
PhD, written yesterday.
“At
present, the S&P 500 is again just 10% below the high it set before the
recent market downturn began. In my view, the likelihood is very thin that the
economy will avoid a recession, that Greece will avoid default, or that Europe
will deal seamlessly with the financial strains of a banking system that is
more than twice as leveraged as the U.S. banking system was before the
2008-2009 crisis...”
Mr.
Hussman continues with some cautionary comments regarding the markets:
“As
of last week, the Market Climate in stocks remains negative, but has
deteriorated significantly from the more benign negative levels that we've seen
in recent weeks. Generally speaking, the worst market plunges tend to feature
three things - overvaluation, negative market action, and a short-term
overbought condition. You rarely see the three together, because establishing
that sort of condition requires a strong rally against both overvaluation and
negative internals. That's about where we are, though we can't rule out a
modest extension for a bit…” - John Hussman, PhD, Weekly Market Comment (17 Oct
2011) http://www.hussmanfunds.com/
NTSM
is still BUY.
I bought back into the stock market at S&P 500 1155 on 7 Oct
after the 6 Oct NTSM buy signal.
After a significant bottom, the market often climbs relentlessly
on relatively low volume as many investors sit on the sidelines waiting for a
pullback. So far, that is exactly what
we have seen. Even the big pullback yesterday
fits the pattern, especially since the S&P bounced upward again as those
who feel they are missing the boat jumped aboard, even after Apple missed its
revenue expectations. We are due for a
pullback in the 3-5% range.
I am 100% long in the long term portfolio (100% stocks in the
401k.) and 50% long in the trading portfolio. (See the page “How to Use the NTSM System” –
the link is on the right side of this page).
Since this may just be a bounce, we must be somewhat wary, especially with both IBM and Apple disappointing the market.
I cut the trading portfolio position in the morning to 50%
because it looked like we were headed for a down day. (That would not have fit the pattern of up
moves and taking profit (and cutting risk) seemed like a good idea.)
