TECHNICAL RALLY (From Minyanville)
Market
Heading Down to Bottoming Process
By Jeff Saut Jun 04, 2012 10:20 am
"...over the past 20 years a break below the 200-DMA by the SPX, after it has stayed above it for three months, has typically led to a rally. And despite the break below my 1290 pivot point I can't shake the feeling that all of this is just part of the bottoming process."
Read more: http://www.minyanville.com/business-news/markets/articles/spx-255EIXIC-indu-RYN-Rayonier-investing/6/4/2012/id/41454#ixzz1wqABDyRP
By Jeff Saut Jun 04, 2012 10:20 am
"...over the past 20 years a break below the 200-DMA by the SPX, after it has stayed above it for three months, has typically led to a rally. And despite the break below my 1290 pivot point I can't shake the feeling that all of this is just part of the bottoming process."
Read more: http://www.minyanville.com/business-news/markets/articles/spx-255EIXIC-indu-RYN-Rayonier-investing/6/4/2012/id/41454#ixzz1wqABDyRP
CRASH (From
Hussman Funds)
John
Hussman, PhD:
"...we presently estimate prospective 10-year total returns (nominal) for the S&P 500 about 5.5% annually, based on our standard methodology. Most bear markets have historically ended only after prospective returns moved above 10% (including bear markets in periods of very low interest rates, and also including 2009)...
... a prospective return of 10% in the interim would require an S&P 500 in the mid-800's. Though I think it's plausible that we'll establish prospective returns consistent with the start of a secular bull market at some point in the next few years, actually quoting the associated level for the S&P 500 would only strain credibility here."
-John Hussman, Phd, 4 June 2012 Weekly Market Comment,
http://www.hussmanfunds.com/index.html
"...we presently estimate prospective 10-year total returns (nominal) for the S&P 500 about 5.5% annually, based on our standard methodology. Most bear markets have historically ended only after prospective returns moved above 10% (including bear markets in periods of very low interest rates, and also including 2009)...
... a prospective return of 10% in the interim would require an S&P 500 in the mid-800's. Though I think it's plausible that we'll establish prospective returns consistent with the start of a secular bull market at some point in the next few years, actually quoting the associated level for the S&P 500 would only strain credibility here."
-John Hussman, Phd, 4 June 2012 Weekly Market Comment,
http://www.hussmanfunds.com/index.html
Today we had a face off
for the ages as the technical bulls challenged the bad-news-bears. You may recall the employment news was bad
last Friday. (How can we forget?) That
news brought down the market sharply on Friday – or so say the pundits. “Not so fast,” is the response from the
technicians. It was only a small break
of the 200-dMA and it appears that market internals may be turning around.
In the end it looks like a
tie to me. I think we’ll have to wait a
bit longer to see if the correction is nearly over – or if it is just getting
started.
MARKET
The S&P 500 was
unchanged Monday at 1278. VIX fell 2% to
26.12 today.
There are several reasons
that there should be a bounce now.
Friday was a statistically significant day and many trade the opposite
direction, so today held and that may carryover tomorrow. The 200-dMA held. The S&P 500 is at the bottom of the trend
line, albeit a downtrend. Even so, that
is excuse enough for a bounce. Many will say that today was a double bottom –
incorrectly I think – but that won’t stop them from buying. Last, as I write
this the futures are up. As I wrote
above, I want to see more data before we sound the all clear..or slam the panic
button.
NTSM
The NTSM remained SELL
Monday, but only the Price and VIX indicators are negative. Volume and Sentiment are neutral.
It would surprise me, but
it is possible that this will turnaround quickly. The technicians are putting up a good fight.
MY INVESTED POSITION
I reduced my stock
holdings to 30% (0% in stock in the 401k) at S&P 1358 after the SELL signal
on 9 May 2012. (See the page “How to Use the NTSM System” – the link is on the
right side of this page). I cut my stock
position to 15% on 17 May in order to maintain a 10% gain in a trading/longer-term
position I had in the QQQ.
