Friday, July 19, 2013

More SELL Signals (Including NTSM)

THE TOP IS IN (Market Watch)
…Ho, hum…how many have called the top (and been wrong)?  Here’s the teaser and link:
“Raymond James Chief Investment Strategist Jeffrey Saut…has been targeting July 19 as ‘intermediate top’ for the market for two and a half months. He cited quantitative timing and technical models, and said he’s been raising cash.
Saut’s looking for a correction of 10% to 12%.”  Story at…

ANOTHER SELL CALL (Mark Hulbert, Marketwatch)
“…the “High Low Logic Index,” created by Norm Fosback in 1979, then the president of the Institute for Econometric Research, and currently editor of Fosback’s Fund Forecaster” …is now in “sell mode”.  Story at…

“The big drop in full-time workers and the large increase in part-timers in June is almost surely statistical noise, with absolutely no meaning at all…the trend toward more part-time employment is nothing new. In 1968, just 13% of workers worked less than 35 hours (the government’s definition of part time). By 1980, that had risen to 17%.” Commentary at...

“…some saying President Barack Obama’s 2010 health-care law exacerbates the trend…It’s hard to make any judgment,” Bernanke said when Stutzman asked if the Patient Protection and Affordable Care Act’s mandates are slowing the economy. Bernanke said that it has been cited in the economic outlook survey known as the Beige Book, which the Federal Open Market Committee considers in assessing the economy.

“One thing that we hear in the commentary that we get at the FOMC is that some employers are hiring part-time in order to avoid the mandate,” Bernanke said. He added that “the very high level of part-time employment has been around since the beginning of the recovery, and we don’t fully understand it.”   Story at…

“The risky hunt for investment income in a low-interest-rate world has been a preoccupation of retirees for almost five years now—ever since the Federal Reserve slashed interest rates in a bid to revive the economy. So there’s been at least a small measure of satisfaction this week in seeing the Fed acknowledge its role in putting investors in that bind. In a Monetary Policy Report, published Wednesday in conjunction with Fed Chairman Ben Bernanke’s testimony in Congress, the Fed acknowledged that while the extended period of low interest rates had done some economic good, it has also pushed some investors “to ‘reach for yield,’ through excessive leverage, duration risk, credit risk, or other forms of risk-taking.”  Full story see…

Friday, the S&P 500 was up 2pts to 1692 (rounded). 
VIX was down about 7% to 12.84.  

Closing up today (Friday), the S&P 500 again is up 9 out of the last 10-days and it is up 16-days out of the last 20.  Combined with elevated sentiment values and a high percent-above-the 200-day moving average, a correction is suggested.  (The S&P 500 is 10.9% above its 200-dMA.  The S&P 500 peaked in May when the index was 12.7% above the 200-dMA.)  Further…

The S&P 500 has closed above its previous (21 May 2013-1669) top 7-times, but as of today’s close, the index is only 1.3% above the prior top; thus, the top has not been decisively pierced.  Together it’s just more evidence that a correction may be imminent…BUT…the US stock market seems to be the world’s safe haven, so perhaps it will again ignore technical analysis and continue upward.

Friday, the overall NTSM analysis switched to SELL at the close. 

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.