First CHINA:
BEIJING - China has made the first annual reduction in its
holdings of US Treasury bonds in a decade. Experts are viewing the move as a
sign that the country is accelerating the move away from dollar assets in
search of more diversified investment channels.
According to the latest monthly figures from the US Treasury
Department, China's holdings of US Treasury bonds dropped for a fifth
consecutive month in Dec to $1.15 trillion.
Full story at: http://www.chinadaily.com.cn/business/2012-03/03/content_14746503.htm
If China is cutting
back, who is buying them? Are higher
interest rates coming?
HUSSMAN FUNDS
COMMENTARY
In his weekly
commentary Mr. Hussman wrote, “Last week, the estimated return/risk profile
of the S&P 500 fell to the worst 2.5% of all observations in history on our
measures. This is not a runaway bull market. Rather, it is a market that again stands
near the highs of an extended but volatile trading range. I am convinced that
the breakdown of the market from this range has been deferred only through
repeated and extraordinary central bank actions.…the period since
2008 has been extraordinary in terms of how often a hedged investment stance
has been appropriate. The validation for such a defensive stance should be
obvious given the fact that stocks have underperformed Treasury bills since
that time, including two separate market plunges in excess of 50%. While much
more frequent hedging has been required, even the past decade supports the
expectation that the completion of the present bull-bear cycle will produce
substantial opportunities to accept market risk. Our present defensiveness is
unlikely to persist a great while longer…” March 5, 2012, Weekly Market Commentary by
John Hussman, PhD at http://www.hussmanfunds.com/weeklyMarketComment.html
To summarize the
obvious, Mr. Hussman thinks the end of the bull-run is coming soon.
Perhaps it’s not a
coincidence…
Today, Monday, the
NTSM analysis switched to HOLD.
Other than the price
indicator, all other
indicators are hold. (The Price indicator is sitting exactly on the buy/hold line.) Sentiment is quite elevated, that is a worry, but Sentiment is not yet a
sell.
A few more issues of
concern: (1) the Morgan Stanley Cyclical Index has underperformed the S&P
500 over the last month; (2) the smaller stocks (Russell 200) are ALSO
underperforming the S&P 500; (3) the percentage of advancing stocks has
dropped below 50% over both the past 2-weeks and 1-month period. None of those are encouraging, but since we
were expecting a drop to the lower trend line, the stats are not too worrisome…yet.
Another 2% drop (or there about) would get
the S&P to its lower trend line. The
bottom line: the NTSM is not calling a sell…it is HOLD.
My guess is that the
S&P 500 can continue up further, but we’ll see. The S&P needs to bounce upward from the lower trend line when it get's there.
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).
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.
