Tuesday, July 2, 2013

OIL near $100; ISM Up Slightly

“Instability in Egypt and Libya bolstered crude oil on Tuesday, with U.S. oil zeroing in on $100, as supply concerns stemming from geopolitical turmoil momentarily overrode fears about the global economy.

Benchmark crude for August delivery gained $1.61, or 1.6 percent, to close at $99.60 a barrel in New York after rising as high as $99.87. Oil last crossed $100 a barrel on Sept. 14 of last year.” Story at…

Consumers will have to spend more on gas and less on goods and services.

“…we could see near $4.00 gas at the pump by August.”  Story at…

ISM UP (CNN/Money)
“U.S. manufacturing activity expanded in June after it had contracted the previous month, according to a report released Monday.  
The Institute for Supply Management's monthly index on the U.S. manufacturing sector came in at 50.9 in June, up from 49 in May. Any number above 50 indicates the sector is expanding.http://money.cnn.com/2013/07/01/news/economy/ism-manufacturing/

Both the 10 and 20-d MA were below 50% so the market remains shaky.  90 more stocks made new-highs vs. new-lows.  That’s a decent number, but trends remain mixed.

Volume has been down about 10% on Monday and Tuesday.  I expect it will be lower the rest of the week with the Fourth on Thursday. 

Tuesday, the S&P 500 was basically unchanged at 1614 (rounded).
VIX was up less than 1% to 16.44.

The S&P 500 pulled back from its upper trend line today.  

Tuesday, the overall NTSM analysis slipped to SELL at the close.  The first NTSM sell signal in this cycle was on 16 April at S&P 500 1575. 

Volume and VIX indicators are negative.  Other indicators are neutral.  The correction is now 29-days old.  Recent “small” corrections of 10% or less have lasted about 40-days.  The 19% correction in 2011 lasted about 100-days.

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.