Chart from Yahoo Finance (annotated by NTSM)
The above chart recognizes that the Bond market can
sometimes be a leading indicator for the stock market. In this case, the chart is a plot of the TR
Price High Yield mutual fund, ticker symbol TYHYX in Blue and the S&P 500 in Red. High yield bonds tend to trade like stocks,
because they are sensitive to economic conditions. Most bonds normally trade opposite to the
stock market, but that really depends on interest rates. (Many analysts are concerned that we may see
bonds and stocks fall in tandem during the next crisis.)
It is apparent in the above charts that the High Yield
fund has been leading the S&P 500 by a few weeks over the past 6-months or
so. What is also apparent is that the
High Yield fund has been falling since the 3rd week in July while
the S&P 500 has moved to new highs.
High Yield bonds are suggesting a top.
(BTW…I have called 5 out of the last 2-tops. Bad joke! This has been a tough market.)
US SHUTDOWN BATTLE BEGINS (Reuters)
“A battle in Congress expected this fall over the budget
and a potential government shutdown broke out early on Thursday as Republicans
in the Senate effectively killed a $54 billion spending bill for transportation
and housing projects.” Full story at…
ART CASHIN HOW TO TRADE A DULL MARKET (CNBC)
“As trading volumes and market volatility hover at the lowest levels of
the summer, in this "dull" market it is very hard to make money right
now, said Art Cashin, director of floor operations at UBS Financial Services,
on CNBC. Of "all the old talk about
what you do and don't do in a dull market, one of the things you do is stay
away from it, basically," Cashin told "Squawk on the Street" Tuesday.
"There's very little money to be made." Story and Video at
MARKET REPORT
Tuesday, the S&P was down 0.6% to 1697 (rounded).
Tuesday, the S&P was down 0.6% to 1697 (rounded).
VIX was up more than 7% to 12.72.
The S&P 500 is still more than 10% above its 200-day moving average
and that is a point at which corrections frequently occur.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks
advancing on the NYSE is 44%. Usually a
value below 50% signals additional trouble for the markets. Only 25% of stocks on the NYSE were advancing
today.
New-high/new-low data is now decidedly down
as the new-lows exceeded new highs today.
There were 183 new-lows on the NYSE Tuesday; that’s the highest in about
6-weeks.
Overall, “Internals” remain negative (and
suggest further downside),
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.
I am committed to this course of action for some
time. Now; I think I just need to be
committed!
