NY MANUFACTURING SLOWS SHARPLY (CNBC)
“The New York Fed's "Empire State" general business conditions
index dropped to 6.56 from 20.21 in March, far below economists' expectations
for 18.00. It was the lowest level since last November...
..."Manufacturing was decidedly a negative surprise," said
Wayne Kaufman, chief market analyst at John Thomas Financial in New York. If
manufacturing slows down, that will certainly be a headwind to the
economy.’” Full story at...
http://www.cnbc.com/id/100641624DANGER, DANGER, DR. COPPER
You may remember that we cautioned about the price of copper not long ago. Copper is often referred to as Dr. Copper, PhD in economics; because the price of copper is thought to reliably predict economic conditions.
Copper has broken below critical support levels per the following piece
from Chris Kimble at dshort.com. This
predicts a weakening economy....as if you wanted more confirmation.
See http://advisorperspectives.com/dshort//guest/Chris-Kimble-130415-Copper-Update.php
PANIC IN GOLD (CNBC)
“‘Michael McCarthy, Chief Market Strategist at CMC Markets, [says that]
conflicting macro flows in the U.S. could lead to markets faltering. He...sees
gold falling to $1,000 per ounce over the next 12 months.’……Gold prices broke below $1,400 on Monday [today], as investors dumped shares of gold miners on worries over their profitability as the yellow metal hit its lowest level since March 2011.
‘We've traded gold for nearly four decades and we've never… ever… ever…
seen anything like what we've witnessed in the past two trading sessions,’
Dennis Gartman, the editor of The
Gartman Letter said in a note on Monday.“ - CNBC
Full story with video at http://www.cnbc.com/id/100640665
My comment: Gold was down 5% Friday; 9% today; and is down about 30%
from its recent high in Oct 2012. It
seems to me that when you have panic in the markets - and it looks like a panic
in gold – the stock market is likely to be rattled too. There will be some who take the other side of
the argument and suggest that the money coming out of gold will go into stocks.
A CAUTIONARY THOUGHT:
Gold has lost 14% in 2-days.
Stocks can crash the same way if panic grips the stock market. Protect yourself by asset allocation. Limit your exposure to the stock market to an
amount that allows you to sleep at night Perhaps this warning is a little late; I
thought it was pretty smart when I jotted this down before the open Monday
morning and gold had already dropped huge in foreign markets.
Interestingly, the odds favor an up day tomorrow after the “statistically
significant” down-day today (Monday).
MARKET RECAP
Monday, the S&P 500 finished down 2.3% to 1552 (rounded).
Monday, the S&P 500 finished down 2.3% to 1552 (rounded).
{I don’t think the tragic events in Boston
had anything to do with the market’s reaction today. The bombing occurred late in the trading day. It was painful to watch news reports. My prayers are with the victims, families and
friends.}
VIX rose over 43% to 17.27; that’s not a typo – 43% in one day.
NTSM
Monday, the NTSM analysis Switched to SELL at the close.
All of the NTSM indicators took a big hit today. VIX and PRICE were both solidly on the sell
side and SENTIMENT almost joined the sell party too when the buy-the-dip crowd
moved in at the close.
The PRICE indicator that tripped to the negative is one that tracks statistical
moves in the market compared to recent market activity. The theory (and it’s based on observation of
prior panic days) is that a big down day like today usually leads to more
selling. I call it the “Panic Indicator.” The most recent panic indicator tripped on 19
Oct 2012, 2-days after the top of 1461, although that was a relatively shallow
mini-correction.
Speaking of panic…I couldn’t find a day that had a bigger panic (on a
statistical basis when compared to recent market action) than today and that
was going all the way back to 2009.
Since VIX is the best indicator in the NTSM system it is more heavily
weighted and needs only one more sell indicator to send the entire NTSM system
to sell. VIX and PRICE alone were sufficient
to call the sell Monday.
REGARDING SENTIMENT
Of the long/short Guggenheim Funds I track for the sentiment indicator, fully
75% of the bets were placed in long funds at the close Friday and 66% of all
money was bet long today at the close. (That’s
courage or stupidity – we’ll find out soon.)
The 5-day moving average of sentiment was 62%-bulls Monday. My sell point for this one indicator is
63%-bulls. So sentiment is still very high even at today’s close.
MY INVESTED POSITION
I remain about 20% invested in stocks as of 5 March (S&P 500 -1540). My reasoning may be found at…http://navigatethestockmarket.blogspot.com/2013/03/why-i-got-mostly-out-of-stock-market.html
…and now I have confirmation from the NTSM analysis.
I have no problems leaving 20% or 30% invested. If the market is cut in half (worst case) I’d
only lose 10%-15% of my investments. It
also hedges the bet if I am wrong since I will have some invested if the market
goes up. No system is perfect.
