As noted yesterday, even
though the jobs data was bad (96,000 jobs created vs 120,000 to 140,000
expected) the market responded with a strong advance. Most suggest that the reason for the advance
was an expectation of further Fed action and that seems to be the case. Given that even the Fed has stated that their
actions in the past have had diminishing returns, there is a possibility that
QE3 will be met with a “sell-the-news” reaction by the markets. (Remember the old stock market saying, “buy-the
rumor; sell-the-news”.) I don’t have a
prediction; I’ll just wait and see what happens.
MARKET
RECAP
Friday the S&P 500
finished UP 0.4% to 1438 (rounded). VIX
fell about 8% to 14.38.
NTSM (MARKET ANALYSIS)
The
NTSM analysis switched to BUY Friday as the VIX indicator improved on the
decline of the VIX.
The
volume indicator is almost a buy too.
Price action has been positive for some time because the up moves have
exceeded down moves. Sentiment is
neutral at 50% bulls.
I still don’t like the market
internals of breadth (percent of stocks advancing) and the new-highs/new-lows
numbers because they are not confirming the current advance in the S&P 500. It’s not that the market can’t continue to go
up if the internals disagree with the market, it can; but the market internals
can be early indicators that perhaps the market won’t advance too much further.
On the other hand, the internals could always switch back to more positive
values removing my concerns. We’ll see…
Just
a reminder: (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 as a fully invested position, however, I am
normally much more aggressive. I have
less invested in stocks now because there’s a lot of risk.
