Wednesday, July 17, 2013

Bernanke Federal Reserve Congressional Testimony

Federal Reserve Chairman Ben Bernanke said the central bank anticipates beginning tapering bond purchases later this year but that policy will remain accommodative and could change depending on the incoming economic data…Bernanke said that if the incoming economic data confirms a strengthening labor market and inflation moving back toward the central bank's 2 percent target, "We anticipated that it would be appropriate to begin to moderate the monthly pace of purchases later this year."  Full story at…

There you have it: tapering should start in 2013.  The last time he said that, there was widespread panic, but this time around markets are more sanguine.

Wednesday, the S&P 500 was up 0.28% to 1681 (rounded). 
VIX was down about 4% to 13.78.  

The S&P 500 remains about 11% above its 200-dMA.  That is an elevated number that is in the range of short-term tops.  The recent top occurred at 12.7% above the 200-dMA so it will be interesting to see if traders will play chicken with that number.

Market internals are mixed in their direction, but the values are generally positive.

Tuesday, the overall NTSM analysis remained HOLD (once again) at the close.

SENTIMENT is elevated.
PRICE is negative as down moves have been bigger than up moves.
VOLUME is positive since more volume has been up than down.
VIX remains neutral; no big moves just a slow bouncing around within a well-defined channel.

Again…from Wednesday…in the last 10-days there has only been 1-down day – that’s a little too much bullishness and is generally negative for the markets.  As noted before, everything is about the Fed so perhaps this market WILL go up forever.

...However, I think current market action represents a continuation of the topping process.

I remain about 20% invested in stocks as of 5 March (S&P 500 -1540).  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.