WashingtonPost.com: “Minutes of the last meeting of the Federal Reserve reveal that many board members see the need for additional monetary action “fairly soon” to boost the pace of economic recovery.” Full story at…
http://www.washingtonpost.com/business/economy/federal-reserve-minutes-many-members-want-action-fairly-soon-to-boost-economy/2012/08/22/dedbe77e-ec82-11e1-9ddc-340d5efb1e9c_story.html
Frankly, that worries
me. If the economy is chugging along,
slowly improving (as has been the mantra from so many) why is the Fed
considering more stimulus?
WORRY FOR THE BULLS?
As the Blog by Mark Hulbert points out, the S&P 500 has not closed above its 2 April 2012 high of 1419 (the high since the dot-com bubble is around 1550), but the 2 April high is the most recent high. When the market hangs around the same level and can’t go up, it must go down. It wouldn’t surprise me to see the S&P 500 fall to its lower trend line, now around 1390, or so. The real question is whether this will break the rally. Double tops, as this chart formation is called, can be a real test for an aging bull market. This one is about 3-1/2 years old now and may be running out of steam. On the other hand, as I have noted recently, just about every indicator I track and the NTSM analysis is positive now. I’d need to see a lot of deterioration before a call could be made that the bull is over, so I am not concerned yet. It may yet break to new highs.
Mark Hulbert’s blog below refers to too much bullish optimism. The NTSM analysis of sentiment is only 52% bulls as of yesterday (latest data available) and that is neutral and not at all overly bullish.
CHAPEL HILL, N.C. (MarketWatch) — “Surprised by the Dow’s continued
inability to close above its early-May highs?
You’re not alone: Tuesday was the 11th day in a row in which the Dow was
less than a percentage point away from eclipsing its May 1 closing high of
13,279. And it was the 11th day in a row in which it failed…Contrarians,
however, have not been surprised by the Dow’s difficulties. For a number of
weeks now, contrarian analysis has suggested that the rally is living on
borrowed time.” Full story at…http://www.marketwatch.com/story/may-june-correction-was-a-failure-2012-08-22
MARKET
RECAP
Wednesday the S&P 500
finished unchanged at 1413 (rounded).
VIX rose over 0.6% to 15.11.
NTSM
The
NTSM analysis remained BUY at the close on Wednesday. (The NTSM analysis is designed to call a BUY or SELL at the bottom or top respectively. A BUY at this point is less significant than it would be at a bottom. For that reason, the daily Buy/Sell/or Hold calls should not be used for trading, except when there is a switch from the previous Buy or Sell call. They give the general market health only.)
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.
With so many indicators
that I watch in positive territory, I am considering moving back into the
market to 100% invested – a truly crazy, risky position, but I am a risk
taker. I may wait for a better buying
opportunity or move in toward the end of the month since my 401k only allows
3-moves per month and the last move must be “all-out”. Moving in at the end of the month of August
leaves more options for September.
