Friday, July 19, 2013

Bernanke…Initial Claims…Philly Fed Index

“Ben Bernanke emphasized in his second day of Congressional testimony that monetary policy will not be tighter for the foreseeable future and that it's too early to tell when tapering will begin….

Bernanke again tried to draw the distinction between paring back bond purchases and raising interest rates, implying that policy will remain accommodative even if the Fed ends quantitative easing since rates will remain near zero…Bernanke said the Fed wants to see sustainable improvement in labor markets as it weighs reducing bond purchases.”  Story at…

The above is not much different than the verbiage that caused the markets to drop a while back - My how times have changed!

Jobless claims dropped by 24,000 to 334,000 in the week ended July 13, the fewest since early May, from a revised 358,000 the prior period, Labor Department figures showed today in Washington. The median forecast of 49 economists surveyed by Bloomberg projected 345,000. The recent swings reflect the difficulty in adjusting the data for the timing of annual retooling shutdowns at automakers, a spokesman said as the figures were released to the press.” Story at…

“The Philadelphia Fed’s manufacturing survey in July surged to 19.8 from 12.5 in June, marking the highest level since March 2011, the regional bank said Thursday. Economists polled by MarketWatch expected a 10 reading.”

Thursday, the S&P 500 was up 0.5% to 1689 (rounded). 
VIX was basically unchanged at 13.77.  

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.

Even so, market internals are now very positive.

Thursday, the overall NTSM analysis remained HOLD at the close.

SENTIMENT is almost negative at 60%-bulls.
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 Monday, Wednesday, and Thursday…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.   Wow…nearly 3-days in a row with 9 out of the last 10-days up.  There have been only 5-down-days in the last 2-weeks.  The S&P is certainly due for some down time.  With the S&P 500 nearly 11% above its 200-dMA and this run of up days, I’d be surprised if we don’t see some down time, but I have been surprised before.  Technicals are suggesting a correction, but in this Fed driven market…who knows?

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.