Khan to
Admiral Kirk: “Surely, I
have made my meaning plain. I mean to avenge myself upon you, Admiral. I
deprived your ship of power, and when I swing around, I mean to deprive you of
your (bull market).” Ok. It’s a stretch.
Monday’s Market commentary from John Hussman, PhD, is as insightful as ever:
“If you dig into the payroll data, the picture that emerges is breathtaking. Since the recession "ended" in June 2009, total non-farm payrolls in the U.S. have grown by 2.32 million jobs (establishment survey, or 2.03 million using Household survey figures). However, if we look at workers 55 years of age and over, we find that employment in that group has increased by 3.04 million jobs. In contrast, employment among workers under age 55 has actually contracted by nearly one million jobs, regardless of which survey you use. Even over the past year, the vast majority of job creation has been in the 55-and-over group, while employment has been sluggish for all other workers, and has already turned down...
In short, what we've observed in the employment figures is not recovery, but desperation. ...Meanwhile, overall labor force participation continues to fall as discouraged workers leave the labor force entirely, which is the primary reason the unemployment rate has declined. All of this reflects not health, but despair, and explains why real disposable income has grown by only 0.3% over the past year.”
From Hussman Funds at…
Sooner or later the market may agree with John Hussman. Here's
another sobering piece of information from CNN/MONEY...
“NEW YORK (CNNMoney) -- While the stock market put up its best first-quarter performance in over a decade, the first three months of 2012 weren't as hot for Corporate America...Analysts are forecasting a 0.1% drop in first-quarter earnings for companies in the S&P 500 (SPX), compared with a year earlier, according to FactSet. While that's not exactly a major decline, it would mark the end of a nine-quarter winning streak.”
TIME TO
PANIC?
Don’t panic yet, profits are predicted to increase in the quarters after this one, but I wouldn’t blame you if you sold out. John Hussman’s comments are depressing, but I don’t know when that will contribute to the downturn.
Don’t panic yet, profits are predicted to increase in the quarters after this one, but I wouldn’t blame you if you sold out. John Hussman’s comments are depressing, but I don’t know when that will contribute to the downturn.
For me, the purpose of the
NTSM system is to take emotions out of the equation and try to rationally handle
investing in the current “buy & hold is dead” climate. Last year there were three sell signals here at NTSM and I
finished even on the first two. Basically, they were false sell signals. The last one (the 19% correction) turned out
well and I finished up 13% after it was over; this time? I don’t know.
We may get a sell soon, but it may be too late if this turns out to be
only a 10% correction. If I tuned the
NTSM system to react more quickly, I would be stuck with more false sell
signals. Enough musing – we’ll just have
to wait and see how this turns out.
THE MARKET
The S&P 500 was down 1.7%
Tuesday to 1359. VIX closed up 8% to
20.4. The S&P 500 is 7% above its
200-dMA and the correction is underway.
It looks like the S&P 500 will drop to the 200-dMA or possibly a
little below to worry us.
NTSM
The NTSM analysis remains
HOLD as of the close Tuesday. Our volume
indicator has flipped to sell, but the VIX indicator has not confirmed it so
far, thus the overall analysis remains HOLD.
Sentiment is still neutral. The price indicator is in la-la
land and not much help. That’s unfortunately
the nature of “top/bottom” models. They
are based on past history and sometimes an indicator can be an outlyer which is why we have 8-indicators in the 4-general areas of Sentiment, Price, Volume and VIX.
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).
