Correction On!

Today the S&P 500 closed 1.7% below the 50-day moving average, now at 1660.  That will convince many to throw in the towel and sell; thus the correction is likely to pick up some steam even though some stats suggest an up-day Wednesday. 

MARKET TECHNICALS TAKE SHAKY LATE-AUGUST TURN (MarketWatch) — “The major U.S. stock benchmarks have taken a technically shaky turn amid renewed geopolitical tensions…the S&P 500’s backdrop highlights the headline technical issue…The index continues to vacillate at its 50-day moving average — currently S&P 1,660 — and this area remains a useful bull-bear technical gauge.” Story at… http://www.marketwatch.com/story/market-technicals-take-shaky-late-august-turn-2013-08-27-131033326

S&P 500 FUTURES ARE BREAKING TOO (ZeroHedge)

“For the first time since the most recent rally began in November, S&P 500 futures have retested (and broken below) the 100-day moving average within days of a previous break (without making new highs). It would appear the…[buy the dip]…mentality is less exuberant with war and a tapering Fed in the background.”  Story at…
http://www.zerohedge.com/

MARKET REPORT
Monday, the S&P was down 1.6% to 1630 (rounded) at the close.

VIX was up 12% to 16.82. 

Today’s move was a statistically significant in price and volume and that may signal an up-day tomorrow; the statistics show this is true about 62% of the time.  This pattern is a bit less secure in a correction, because at some point there will be a waterfall-drop where, statistics be dammed, the market will go down sharply.        

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing on the NYSE fell to 42% at the close.

New-lows outpaced new-highs today leaving the spread at -61 (it was +76 yesterday), with the 10-day moving average of change in spread now trending down strongly.  (5-days ago it was up strongly.)

Today’s reading of Internals is negative on the market and suggests further downside ahead. 

NTSM

Tuesday, the overall NTSM analysis was HOLD at the close.

MY INVESTED POSITION

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.