Stocks advance or
decline in a sloping, saw-tooth pattern within a channel defined by the tops
and bottoms of the points of the teeth.
The S&P 500 channel bottom is now about 1385 or roughly 1% below
today’s close. We could drop to 1370, or
a little below that before I’d get too concerned. A “normal” channel is about 5% (top to bottom)
so I am generally unconcerned with a 5% pullback from the top. That assumes the
NTSM analysis doesn’t give a sell signal along the way.
Our Sentiment
indicator is still only 57% Bulls as of yesterday’s close. That’s getting high, but it’s not extreme and
it should allow us to move higher. The
rise in the VIX is more concerning since that is suggesting the options boys
are placing more bets against the market in the next 30-days, but today the VIX
held steady so maybe we’ll see some market improvement tomorrow.
The NTSM analysis is
an ensemble model that looks at 8-indicators and those indicators don’t always
agree. For that reason, the indicators
are weighted by their performance over the period from 2005-2010. VIX is our best indicator; VOLUME is second
best. They are both neutral today.
THE MARKET
The S&P 500 dropped
0.2% Thursday to 1403 and again, it recovered in the afternoon – that’s remains
encouraging. VIX was unchanged at 15.5
(in round numbers)
NTSM
The NTSM analysis dropped
to HOLD Thursday.
MY INVESTED POSITION
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).
