The S&P 500 was 9.9% above its 200-dMA at the 14 Mar
1563 high. As I wrote a while back, that
was about my guess for a short term top and that remains my best guess although
it’s still possible the markets could get another 5% higher. Currently, the market internals I track are trending
flat to slightly down without enough conviction to indicate where the market is
headed.
I saw a discussion on CNBC where an ardent Bull said he
was bullish because earnings were at an all-time high. Frankly, that is actually a fact that should cause
thoughtful investors to take some money off the table. If earnings are at an all-time high (and they
are), then the only way forward is down. Falling earnings (or even stalled earnings growth,
will take the markets down.
Action during the last hour of the day, the so called “Smart
Money” has been trending down slightly since the recent run-up started in
December of 2012, but the market was down sharply in the last hour today.
If this is the long awaited correction, I’d expect a 10%
correction assuming we don’t get bad news along the way. That may be a bad assumption given the news
from Europe.
MARKET RECAP
Thursday, the S&P 500 finished down 0.8% to 1546 (rounded). VIX was up 10% to 13.99.
Thursday, the S&P 500 finished down 0.8% to 1546 (rounded). VIX was up 10% to 13.99.
NTSM
Thursday, the NTSM analysis remained HOLD at the close.
My numerical system, the Navigate the Stock Market analysis (or NTSM) has
been deteriorating. Sentiment is already extremely
stretched. The recent rise in the VIX and
increased downside Volume has begun to suggest that the NTSM may switch to sell
soon. That would confirm my current
bearish stance. Frankly, whenever I have
chosen to ignore my NTSM analysis and make a “reasoned,” though still somewhat
emotional, decision, I have lost money relative to the S&P 500. We’ll have to wait and see what happens this
time.
MY INVESTED POSITION
With long-term funds, I remain about 20% invested in stocks as of 5
March, due to my risk tolerance rather than the numerical NTSM analysis. To put it bluntly, I currently have no
tolerance for risk. (If I were strictly
following the NTSM numbers, I'd still be heavily invested in stocks.) My
reasoning may be found at…http://navigatethestockmarket.blogspot.com/2013/03/why-i-got-mostly-out-of-stock-market.html
