CNN/MONEY
“The Institute for Supply
Management said its June Purchasing Manufacturers Index fell to 49.7, down from
53.5 in May. It was the first time the index fell below 50, which signals expansion
in the sector, since July 2009. Economists surveyed by Briefing.com were
expecting the index to decline to 51.5.”
Full Story at...
http://money.cnn.com/2012/07/02/news/economy/ism-manufacturing/index.htm
http://money.cnn.com/2012/07/02/news/economy/ism-manufacturing/index.htm
July 2009 was the end of
the last recession. The US PMI is not
the only one to worry about.
CHINA PMI
HSBC China Manufacturing PMI™ indicated sharper declines in output, new business and export orders in
June. “A lack of demand was behind the latest deterioration
in operating conditions, with total and foreign new orders falling at
accelerated rates in June. New export orders placed at goods producers dropped
at the steepest rate in over three years. North America and Europe were both
cited as sources of new order book weakness.”
Full story at…
JOHN HUSSMAN PhD, Weekly
Market Commentary, July 2. 2012
Regarding the Market:
“The unusually bad
outcomes of similar historical precedents help to convey why we retain such a
durable sense of doom, even after last week’s scorching “risk on” advance. …Here
and now, present conditions remain among the most negative in history from a
prospective return/risk standpoint.”
Read the commentary at…
http://www.hussman.net/
In spite of some bad news,
the market was up Monday. Just shows
what I know!
MARKET
Monday, the S&P 500 was up
0.25% to 1366. The VIX fell 1.6% to 16.80.
The futures had been up
Monday morning before Monday’s open based on EU agreements to save the banks,
but that didn’t last long. The
Purchasing Managers Index (PMI) numbers released in the morning were quite
disappointing and the market fell, but recovered later in the day.
My impression is
that Friday’s 2%+ gain represented a short-term top rather than a change in
direction for the market. It is
important to keep in mind that the price of stocks is determined primarily by
earnings potential – not what happens in Europe per se. Europe is important only to the extent it
affects earnings of US companies.
Unfortunately, Europe is in recession now. NPR reported this morning that the
unemployment rate rose to 11.1% in the Eurozone setting a record high for the
region since the Euro was instituted in 1999. (Story at… http://www.npr.org/templates/story/story.php?storyId=156100692)
NTSM
The NTSM analysis is HOLD
again Monday, although again, indicators improved slightly.
The best indicators, VIX and
Volume, are both still neutral. As I
have recently said (all too frequently, no doubt), the NTSM analysis is very
close to a buy signal. As always, I must
warn that it could also fall quickly.
Because of the Holiday, it will be more difficult than normal to guess
market direction this week - many pros are out of town and not trading. Today’s volume was about 10% below the
average daily volume for the last 20-days.
My guess is that the market will go down from here, but that may not be
the case at all. This market seems to
want to go up in spite of bad news. With
that in mind I will keep a conservative position until the NTSM analysis
indicates a buy.
MY INVESTED POSITION
I remain out of the market…
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.
