CHARTING: I look at a
chart of the S&P 500 to see where the Index falls within the channel. It is currently in the middle of the channel
so I think the S&P 500 can go up another 2% or so before it may run into headwinds.
%-ABOVE THE 200-DAY MOVING
AVERAGE (200-dMA)
The
S&P 500 is about 6% above its 200-dMA.
The market usually tops out when the S&P 500 is about 10-15% above
the 200-dMA so there is room to run there.
SMART MONEY
There are different ways
to look at the “Smart Money Index.” I
follow the action in the last hour of market trading to see what the professional-traders
are doing. Recently the trend has been
down at the end of the day, but over the last 2-months or so the market has
moved up in the last hour of trading so, overall, I’d say this indicator is
slightly positive. This is my least
tested indicator since I’ve never found easy access to past data for this
indicator. Manually loading each day of
data is too much of a pain.
RECESSION INDICATOR
My recession indicator
compares the Morgan Stanly Cyclical Index to the S&P 500 index. The theory here is that the professional
traders move in and out of cyclical stocks depending on the business cycle. In other words, they would sell the cyclical
stocks (those that would be most hurt by recession) prior to recession. This indicator is currently NOT suggesting a
recession. The cyclical stocks are rapidly
gaining on the S&P 500.
So that’s a quick run-down
of a few indicators that are not in the NTSM analysis. Here’s today’s recap followed by today’s NTSM
analysis result.
MARKET
RECAP
Friday the S&P 500
finished UP 0.19% to 1418 (rounded). VIX
fell almost 6% to 13.45. I had to go all
the way back to June of 2007 to find a closing VIX that low. To me, low volatility means slow steady gains
so I’ll be curious to see how much longer, and lower, the VIX will drop. While low VIX is generally good, I do worry
there is a limit to how low it can go. If
it gets too low, it may signal the start of a serious bear when it begins to
rise from a very low bottom. That’s what
happened in 2007 when it dropped to 10.
NTSM
The
NTSM analysis remained BUY at the close on Friday.
MY INVESTED POSITION
Based on the BUY signal, 6
July, I moved back into the market on 9 July (after the weekend) at S&P 500
1352. I now have a 50% stock allocation
overall. For my age, that is what most
advisors recommend, however, I am normally much more aggressive. I have less invested in stocks now because
there’s a lot of risk.
