“U.S. stocks closed lower Thursday, after investors fretted that the Federal Reserve might end its intervention in the markets sooner than expected…The minutes from the Fed's December meeting showed some members were weighing whether the central bank should wrap up its bond buying program before the end of this year.
"People thought bond
buying would go through 2013 at least," said Douglas DiPietro, managing
director at Evercore. "Now it looks like some members of the committee are
getting more cautionary about that."
Full story at…
UNEMPLOYEMENT (from ENews Park Forest)
“In the week ending December 29, the advance figure
for seasonally adjusted initial claims was 372,000, an increase of 10,000 from
the previous week's revised figure of 362,000. The 4-week moving average was
360,000, an increase of 250 from the previous week's revised average of
359,750….The total number of people claiming benefits in all programs for the
week ending December 15 was 5,402,987, a decrease of 68,727 from the previous
week. There were 7,223,309 persons claiming benefits in all programs in the
comparable week in 2011.” Full story at... http://www.enewspf.com/latest-news/latest-national/39419-unemployment-insurance-weekly-claims-report-for-week-ending-december-29-2012.html
The “total persons claiming benefits” is a 25%
drop from year ago values, so year-over-year, we’re headed in the right direction. The rise this week is worth watching. We’ll find out more when Friday’s jobs
report comes out. The ADP employment
numbers were pretty good today so it will be interesting to see the Government’s
take.
RECESSION FEARS
My comparison of the Morgan Stanley Cyclical
Index vs. the S&P 500 shows investors are buying the cyclical
stocks at a pace that means investors currently think there is NO chance of
recession.
REVISED NTSM THINKING
This year has been a challenge for the NTSM
system and I under-performed the market somewhat. (I’ll post the numbers later.) This has caused me to look hard at the
bottoms in the S&P 500 on 15 Nov (1353) and 1 June (1278). Neither were classical bottoms in the sense
that market internals improved enough to justify calling a bottom at the lower-low. Volume didn’t take off either, so most
investors didn’t pile in to make it obvious that the bottom had been missed. In each case though, there was steady
buying. A review of market action
following the 2012 bottoms indicated that it should be possible to review
market internals at the higher-low (the first pull-back after a bottom) and call
a higher-low buy point. This should
improve the NTSM performance going forward when bottoms are marginal. These
typically occur on small declines (less than 15%) as was the case in 2012.
As for the fiscal cliff, that was simply a
crap shoot and I don’t like the idea of playing craps with my retirement
funds. Thanks, clowns in Washington. It
is time to RAIN on the Politicians – Remove All Incumbents Now. That might be the only way to make them work
for the people instead of themselves.
MARKET RECAP
Thursday
the S&P 500 was down about 0.2% to 1459 (rounded). VIX was down 0.75% to 14.57. VIX fell 37% over the previous three days. You have to go back to May of 2010 to find a drop in the VIX of 37% or more.
NTSM – Overall is HOLD
The NTSM analysis switched to HOLD Thursday
after the BUY Wednesday as VIX fell again; it’s now below 15. I saw a note on a trader board that traders
should short if it falls below 14. I pay
more attention to the direction of VIX than its value. Back before the last crash the VIX was all
the way down below 10. Indicators
follow:
Sentiment: Negative
Price: Positive (Up moves have been larger
than down)Volume: Neutral (Selling today pushed this indicator down from yesterday’s buy)
VIX: Positive (Huge drops in VIX triggered buy rating
I haven’t gone back in yet. As I said yesterday, I will be patient and
wait for further confirmation of the buy signal on Wednesday. That could happen anytime though. I’ll try to post any changes to the Blog.
At best, my guess is that the S&P 500
might make it another 5 to 10% higher, but it needs to pull back to clear the
air before it can get much higher than that.
If I was in the market, I’d probably stay in;
as it is, I am comfortable out...at least for a while longer. The high bullish
sentiment still has me spooked.
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 negativity I have noted from
Hussman and others, I am currently invested in a range of near 15% invested in
stocks. 
