Frankly, this is an amazing number because Consumer Confidence
often tracks the stock market and the stock market was down the entire month of
November. I see this as bullish for the
market.
Keep in mind that most of what NTSM does is analyze technical
indicators in the market (Sentiment, Price, Volume & VIX). Bad news can trump technicals most anytime
and the European situation may not have a solution that is neat and tidy. A break-up of the Euro or European Bank
failures could upset our markets at any time. Further, Euro recession seems almost certain
and that could hurt earnings here.
In a Wall Street Journal article (WSJ) Saturday, Tim Smith of
Maersk lines (a shipping company - real ships, as in containers) said “Almost all carriers are losing money
now…and it looks like 2012 will be similarly challenging.” The article said the problem was the “weak
Europe-Asia” route. Mr. Smith said “The US looks a little better, but it’s
difficult to call.” Shipping can be a “canary in the coal mine”
for the world’s economy. So as we’ve
noted before, it looks like Europe will be in recession soon if it isn’t
already there.
OK…enough speculation; we just need to be wary and ready to sell
if the music stops.
I
commented earlier that those in the TSP (the Government’s 401k) might consider
investing in the S-fund after the 3 October bottom. The S-fund tracks the Wilshire 4500. Small caps tend to outperform large caps after
a recession. Since the market priced-in
a potential recession in the recent correction, the S-fund has been outperforming
the C-fund (S&P 500). Since the 3
October low, the S-fund (Wilshire 4500) has outperformed the C-fund (S&P
500) by about 7% as of yesterday’s close.
The
S&P 500 contains 13% financials and derives significant income from
overseas. Both of these factors make the
S&P 500 more susceptible to problems in Europe so I plan to stay invested
in the S-fund. The US isn’t looking like
recession yet, but problems in Europe might cause problems for our fragile economy. If that happens, the S-fund
won’t be a safe haven, but perhaps it will hold up longer than the S&P and
I’ll come out slightly ahead before I sell (assuming the NTSM system generates
a sell).
Closing
volume data wasn’t available (as of this post) but that won’t matter today: NTMS is HOLD again.
I
bought back into the stock market at S&P 500, 1155 on 7 Oct after the 6 Oct
NTSM buy signal. I remain 100% long in
the long term portfolio (100% stocks in the 401k.). (See the page “How to Use
the NTSM System” – the link is on the right side of this page).
I
am 90% long in the trading portfolio.
Just a reminder: 100% invested in stocks is way too much for most rational folks. Don’t do it unless you have a high tolerance for risk.
