Monday, July 15, 2013

Current Inflation Rate is 8% - per 1980 Methodology; Retail Sales Disappoint

Chart from

“Retail sales rose less than forecast in June as demand cooled at building materials outlets and restaurants, showing the biggest part of the U.S. economy lacked momentum as the second quarter drew to a close.

The 0.4 percent gain followed a 0.5 percent increase in May that was less than previously reported, Commerce Department figures showed today in Washington. The median forecast of 82 economists surveyed by Bloomberg called for a 0.8 percent advance. Sales were unchanged excluding the biggest jump in automobile purchases since November.”  Story at…

LIQUIDITY TRAP (Lance Roberts)
"The real concern for investors, and individuals, is the actual economy. We are likely experiencing more than just a 'soft patch' currently despite the mainstream analysts' rhetoric to the contrary. There is clearly something amiss within the economic landscape and the ongoing decline of inflationary pressures longer term is likely telling us just that. The big question for the Fed is how to get themselves out of the 'liquidity trap' they have gotten themselves into without cratering the economy, and the financial markets, in the process. As we said recently this is the same question that Japan is trying to figure out as well…Are we in a "liquidity trap?" Maybe. Of course, no one recognized Japan's problems either until it was far too late." – Lance Roberts posted at at

In the article Lance Roberts defines the liquidity trap and compares our situation to Japan.

“[This] week marks the first big week of second-quarter earnings and it is sure to bring both joy and misery to Wall Street. Investors will concentrate on market fundamentals after weeks when Federal Reserve policies have dominated the market…
…"We're in the terminal stages of a Bernanke-driven bubble," said Walter Zimmerman, technical analyst at United-ICAP in Jersey City, New Jersey..."The Fed has been able to prevent a big selloff so far, but eventually the economy will have to catch up to the market or the market will fall back to match the economy," said Scott Armiger, who helps oversee $5.6 billion as portfolio manager at Christiana Trust in Greenville, Delaware.”  Story from yahoo at…

Monday, the S&P 500 was up 0.1% to 1683 (rounded), another new high.
VIX was down about 0.4% to 13.79.  

The direction of Market Internals are conflicting without too much information at this point; but the values for market internals look like further gains will ocurr.

The S&P 500 is once again about 11% above its 200-dMA.  That is an elevated number that is in the range of short-term tops.

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.  At this point, everything is about the Fed so perhaps this market WILL go up forever.

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

The NTSM system is currently underperforming the S&P 500 by a little less than 7% in 2013. 

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.