"The latest new orders number at -5.2 percent was well below the Briefing.com consensus of -3.5 percent. Year-over-year new orders are down 3.0 percent....However, if we exclude both transportation and defense, "core" durable goods were up an astonishing 10.2 percent. Year-over-year core goods are up 4.5 percent.” - Doug Short.
Full story, analysis and more charts at...
http://advisorperspectives.com/dshort/updates/Durable-Goods-Orders.php
Reuters reported the above news as exceptionally good based on the
“core” data. Given the correlation in
the above chart (falling Consumer Durable Goods orders coincident with falling
S&P 500) the news didn’t look that good to me. It looks like durable goods orders are slowly
falling now. That will lead to recession
worries in the market. So how are the
markets addressing this issue?
RECESSION FEARS
Over the last month the Morgan Stanley cyclical index is underperforming
the S&P 500, but not by that much.
This is just another “almost” confirmation of a correction underway. At
the same time, there was some better news related to housing.
PENDING HOME SALES SOAR (CNBC)
“Contracts to buy existing homes in January rose a strong 4.5 percent
from the previous month, according to the National Association of Realtors,
which also revised December's numbers down. That beats expectations of a 1.8
percent gain. Volume is now 9.5 percent above January 2012 and is the highest
reading since April 2010.” Full story
at...http://www.cnbc.com/id/100501214
CONSDER THE REASONS TO SELL EVERYTHING AND MOVE TO BOLIVIA (Ok…so that
may be a little extreme; still there seem to be many reasons to get completely
out of the stock-market.
In fact, my
neighbor, Dennis Gartman, author of the “Gartman Letter”, (not really my
neighbor, but he does live not far from here) announced on CNBC Tuesday that he
is completely out of the market. Other than Dennis, let’s cover a few more
reasons:
(1) The charts don’t look good. The
S&P 500 is near a double top and a resolution of a rising wedge pattern. See…
http://navigatethestockmarket.blogspot.com/2013/01/rising-wedge-rising-concerns.html
(2) Breadth (number of stocks advancing) has been dropping as the
Markets have been rising. See…http://navigatethestockmarket.blogspot.com/2013/02/the-stock-market-correction.html
(3) The new-highs/new-lows market internal has turned down
(4) The movement of price-volume became quite low (low volatility, but not VIX) about 3-weeks ago. That is a very reliable warning of a top within a month after that condition is observed.
(5) The current high moves in price-volume are indicative of a market top. These are easily seen by the back and forth, big daily swings in price.
(6) Sentiment is very high and that is a counter indicator suggesting a pullback.
(7) On the economic front we have falling employment (see the “I can handle the Truth…” discussion at…
http://navigatethestockmarket.blogspot.com/2013/02/stock-market-crash-prediction.html);
less than 2% growth for a year; less than 0% growth last quarter (although no-one believed that); today’s Durable Goods Orders; recession in Europe; debt issues all over the world; dis-functional Government, just to name a few.
Although none of these issues are signaling an imminent move to Bolivia,
taken together I am concerned.
PERSPECTIVE!
I am exaggerating. This still
looks like a correction and not a crisis; but we can never really know how a
correction will play out, if it occurs at all.
CHARTING THE CHANNEL
The S&P 500 is still tracking in an up channel, but I could make an
argument that the recent 1531 high and today’s level of 1516 establish the
top line of a new downtrend channel – that conjecture remains to
be seen. It would be disproven if the
market moves higher from here. MARKET RECAP
Wednesday, the S&P 500 finished up 1.3% to 1,515 (rounded). VIX was down 13%, to 14.73.
NTSM
Wednesday, the NTSM analysis remained HOLD at the close.
MY INVESTED POSITION
I took a hedging, short-position Wednesday afternoon with a very tight
stop. I’ll bail on that if the market
moves up much. With longer term funds,
my investments remain the same.
Based on a BUY
signal 7 of 9-days, and more importantly, consecutive closes above the prior
high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14
January. I am currently invested in a
range of near 50% invested in stocks, but I may not hang around too much longer
regardless of the NTSM numbers.
