MARKET MORE DOUBTFUL ABOUT FED
EASING BENEFITS (CNBC)
“The effects of the Federal Reserve's bond-buying program are
looking more lackluster and more disruptive to market functioning, according to
the latest CNBC Fed survey… Fifty-eight percent of the respondents see the Fed
ending the program within 12 months, by June 2014. Five percent expect the Fed
to stop the program entirely this year, while about 12 percent see it ending in
2015 or later.” Story at…http://www.cnbc.com/id/100822543
CPI RISES ON HIGHER RENT (Forbes)
“Headline CPI gained 0.1% in May, marking its second
positive reading in at least the past seven months and coming in below
expectations which called for a 0.2% print. Over the past 12 months, CPI
inflation is up 1.4%, accelerating from April’s 1.1% reading…Tuesday’s reading
is but a single data point, yet it does show a move away from the
disinflationary tendencies seen in previous reports. The Fed, which favors
personal consumption expenditure (PCE) as a measure of inflation, will be
working with a 0.2% decline in April, according to the latest data reported.” Story at… http://www.forbes.com/sites/afontevecchia/2013/06/18/after-two-months-of-deflation-cpi-rises-on-higher-rent-as-bernanke-and-the-taper-loom/
FED POLICY TO IMPLODE (MarketWatch)
“Be sure your seatbelt is fastened, because nothing has
really come to rest. We have entered the New Abnormal, a period in which every
market assumption must be questioned and the wise investor is prepared to be
surprised.” And that’s how famed
economist Nouriel Roubini and Ian
Bremmer, the president of Eurasia Group, launch into an eight-screen
Institutional Investor assault on all
that’s going wrong with the global economy right now and on how new crises are
most certainly headed our way…”
“…a slow exit risks creating a credit and asset bubble as
large as the previous one, if not larger. Pursuing real economic stability, it
seems, may again lead to financial instability. Thus the exit from the Fed’s QE
and zero-interest-rate policies will be treacherous: Exiting too fast will
crash the real economy, while exiting too slowly will first create a huge
bubble and then crash the financial system.” – Roubini and Bremmer. Full story at….
http://blogs.marketwatch.com/thetell/2013/06/18/roubini-bremmer-and-the-fed-policy-thats-going-to-implode/
MARKET RECAP
Tuesday, the S&P 500 was UP about 0.8% to 1652 (rounded).
VIX was down about 1% to 16.61.Tuesday, the S&P 500 was UP about 0.8% to 1652 (rounded).
Repeating…
As I suggested Friday (posted on Saturday),
the Market Internals indicated a possible reversal Friday and Monday’s action
confirmed it for me. The market has once
again bounced from its lower trend line.
The down-trend is now over, at least for the short-term.
Tuesday…This trend change has now been
confirmed in the charts since the upper boundary of the downtrend line has been
broken.
I think the market may get back to the
recent high around 1670, but that is mostly guesswork. Internals still look good so unless the Fed
upsets the apple cart Wednesday at 2PM, the markets can go higher. This is a short term bounce though and should
not be mistaken for a new secular bull market as the POM-POM boys on CNBC are
suggesting.
The S&P 500 is 10% above its 200-day
moving average and I don’t think it will get too much higher; 1670 is my high
guess.
MARKET INTERNALS
The 10-day moving average of percent bulls
is now up to 51%. (More than half of the
stocks have been advancing over the last 2-weeks.) That is generally positive for the markets…at
least in the short term. The new-highs
outpaced new-lows (spread) by nearly 100 Tuesday, although the spread fell a
little from yesterday.
NTSM
Tuesday, the overall NTSM analysis was HOLD at the close.
SENTIMENT remains extreme: (The
broken record report.) The 5-day moving average was up again to 70%-bulls
(!!!!) in the Guggenheim/Rydex funds I track as of Monday’s close. That suggests topping in the markets.
MY INVESTED POSITION
I remain about 20% invested in stocks as of 5 March (S&P 500
-1540). My reasoning may be found at…(although
that probably looks pretty lame by now.)http://navigatethestockmarket.blogspot.com/2013/03/why-i-got-mostly-out-of-stock-market.html
The NTSM system sold at 1575 on 16 April. (This is just another reminder that I should follow the NTSM analysis and not act emotionally – I am under-performing my own system by about 2%!)
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.
