Spain’s banks face more loan losses as the pace of an economic slump risks turning a worst-case scenario dismissed in stress tests into reality….Bad loans as a proportion of total lending jumped to a record 10.5 percent in August from a restated 10.1 percent in July as 9.3 billion euros ($12.2 billion) of loans were newly classified as being in default, according to data published by the Bank of Spain on its website today. The ratio has climbed for 17 straight months from 0.72 percent in December 2006, before Spain’s property boom turned to bust.” Full story at…
http://www.bloomberg.com/news/2012-10-17/spain-banks-face-more-losses-as-worst-case-scenario-turns-real.html
The headline is probably
worse than the article, but the take away here is that risks are still in
Europe even if Spain did have a good bond auction earlier this week.
MARKET LEADERS ARE FALLING
Here in the U.S., the fall
in the NASDAQ is a concern because when the market leaders begin falling (and other
leaders join them), the market as a whole must follow. It isn’t just the NASDAQ. GE reported falling revenue yesterday and GE fell 3-1/2%
pulling the DOW down today too.
The question here is, “Will
the leaders continue down?” My guess is,
“Yes,” so I’ll be on alert to see if there is a change to the NTSM analysis. I never trade on guesses, though.
PRICE ACTION
Since the market made a
recent top of 1466 on 14 September, the S&P 500 has made 1461 5-times
without getting over that level. I wondered
awhile back if the S&P 500 had topped (http://navigatethestockmarket.blogspot.com/2012/10/have-we-seen-top-alcoa-and-peter-schiff.html)
I thought then that 1461
looked like a top and I still think it is, but remember, trade what you see not
what you think. So I’ll crunch the
numbers and see what the numbers show. As
of today, the numbers are neutral.
WHEN IN DOUBT – CHECK THE
CHART
The chart shows the
uptrend is still intact; but just barely.
It is now slightly below the lower trend line.
MARKET
RECAP
Friday the S&P 500 was
DOWN 1-2/3% to 1433 (rounded) and VIX was UP 13-1/2% to 17.06.
NTSM
The
NTSM analysis remained HOLD Friday, but again, just barely.
There
was some strong selling today and my panic indicator flashed sell, so now I
have 1-indicator in the sell mode. The
rest are neutral.
The
NTSM analysis could easily switch to sell next week. Of course, if the market turns up, it could
just as easily remain hold.
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 currently have a 50%
stock allocation overall. For my age,
that is what many 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.
