NTSM RECESSION INDICATOR
The NTSM recession
indicator simply compares the Morgan Stanley Cyclical Index (^CYC) to the
S&P 500 to see which is performing better.
If investors were betting on a recession, the ^CYC would be falling
faster than the S&P 500. Over the last 10-days, the ^CYC is up almost 5% and, as of Thursday, it was outperforming the S&P 500 at a fairly steep rate over the longer term. Based on these stats, it appears that investors are positioning themselves for more growth…not less. On the other hand, I think there is too much optimism.
TOO MUCH OPTIMISM
The S&P 500 has only
been down 2-days in the 10-trading days.
That’s a very long winning streak.
I looked for good news that might explain it. Was there any? I couldn’t find it. At best, it seems to me the news has been
neutral to slightly positive – just not that positive.
MARKET
RECAP
Friday the S&P 500 was
up a fraction of a point, but basically unchanged at 1416. (rounded). (I don’t like tiny gains. I always figure if the market can’t go up it
will go down. That’s partly
superstition.)
MARKET PREDICTION
VIX dropped to 15 Thursday,
but bounced up more than 5% to 15.9 on Friday.
Breadth fell Friday – there were 1279 stocks advancing and 1666
declining. So both VIX and breadth were
down, but the S&P 500 was unchanged. Combine that with the extreme
number of days the S&P 500 has been up over the last 2-weeks and I’d say
Monday will be a down day.
My favorite “new-hi/new lo”
indicator (a long-term one) is also turning down. Bottom line, I think the
bounce from the 15 November low is coming to an end and the market will begin
trending down. I might also note that
the bounce has taken the S&P 500 up about 50% off the low and that is a
common retracement level.
I am still betting that
the markets will re-test the 1353 low.
When it does, I’ll analyze the data and make a decision – buy or
continue to remain mostly out of the market.
NTSM
The
NTSM analysis remained HOLD Friday.
MY INVESTED POSITION
Based on the SELL signal,
7 November 2012, I moved out of the stock market at 1377 on the S&P
500. Because of the extreme negativity I
have noted from Hussman and others, I am currently invested in a range of near
15% invested in stocks and I am still holding short positions. 
