Friday, July 12, 2013

Producer Price Index…Correction NOT Over?

PPI (Econday)
The Producer Price Index and Core PPI are shown in the chart below, updated thru today’s release.

“The producer price index in May posted a 0.5 percent increase after falling 0.7 percent prior month. The core rate, which excludes both food and energy, held steady at 0.1 percent.”  Story at Bloomberg Econoday at…

More from Bloomberg…
“The increase in producer prices is very much an energy story,” said Gennadiy Goldberg, a strategist at TD Securities Inc. in New York, who accurately forecast the gain in core costs. “We’re not seeing much of the gain translate into higher consumer prices yet.”  Story at…

Consumer confidence unexpectedly cooled in July as Americans became less optimistic about the outlook for the economy.  The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 83.9 in July from 84.1 the month prior, today’s report showed…The gauge reached an almost six-year high of 84.5 in May.”  Story at…

Friday, the S&P 500 was up 0,3% to 1680 (rounded), a new high.
VIX was down about 1.2% to 13.84.  

Market internals are decelerating suggesting a possible top is getting closer.  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.  It suggests that the correction that seems to have ended, may only be hibernating a short while; but, as we have seen, the US markets may continue to power up anyway.  Even so, they can’t go up forever.   

Friday, the overall NTSM analysis remained HOLD 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.