HISTORY LESSON 101 – BULL MARKETS DURING SECULAR BEAR
MKTS
The current Bull-market has been ongoing since March 2009
or for 52 Months. The return for the
current Bull is 145%. Historically, this
bull is long-in-the-tooth and overdue to end.
Both the return and the duration are pushing the Historical limits and
far exceed the averages for both duration and return.
STOCK MARKET HISTORY 201 – INDEX VALUE VS REGRESSION LINE
(dShort.com)
Chart from Advisor Perspectives at
“If the index should decline over the next few years to a
level comparable to previous major bottoms, it would fall to the 450-500
range.” Analysis at Advisor Perspectives
at…
Are these history lessons important? See the above cartoon.
MARKET REPORT
Friday, the S&P was up 0.4% to 1664 (rounded) at the close.
Friday, the S&P was up 0.4% to 1664 (rounded) at the close.
VIX was down 5% to 13.98.
The S&P 500 did not decisively break 50-dMA and repeating
yesterday’s comment, statistically, there has been little increase in
price-volume action that would indicate a correction is underway so this market
may turn up again anytime; today, Friday at the close, internals are hinting at a new uptrend.
MARKET INTERNALS (NYSE DATA)
Market Internals are reversing and the trend
in internals have shifted upward. This
reversal is beginning to suggest a turn-around for the Market Indices. It is always difficult to know if this, or
any reversal, will be durable or just last a few days. NTSM uses 10-day moving
averages for these smaller reversal calls so I can only say that for the past
10-days, the trend has shifted up; but we need to look at other clues to guess how long it may last.
The 10-day moving average of stocks
advancing on the NYSE was 45% at the close. It was 39% a week ago so it was up
6% in a week. This is not a huge
reversal like we saw on 25 June when the percentage of stocks advancing was up
7% in 1-day and up 13% over 2-days.
New-highs outpaced new-lows today leaving
the spread at +31 (it was +3 yesterday), but the 10-day change in spread is still
trending slightly down.
The difficulty is knowing whether this will
result in a small retracement up, say a 50% retracement back to about 1675, or
whether the markets will climb above their prior highs around 1710 on the
S&P 500.
Either way I doubt that this is a bottom
that should be bought with long-term money.
I still think we need to test the 200-day moving average (1556 today) or
retest the prior low in the 1575 area.
Topping can be a drawn out process. In 2012 the
S&P 500 was nearly flat from February until July before the correction
really got going.
Traders have a more difficult decision. Those who are short may wish to cover, but
since the prior high is only 1707, about 3% above its present value, there is some
risk either way since they must time a reentry at the top.
I wouldn’t be surprised to see the S&P
500 trade back to around the prior highs, or make new highs, and then fail from
there.
Today’s reading of Internals is positive on
the market, but not hugely so. Perhaps Monday
will give some better idea of direction - in the end, the S&P 500 is still 7% above its 200-day moving average and that limits upside potential to less than 5-percent, at least that has been the recent history.
NTSM
Friday, the overall NTSM analysis was HOLD at
the close.
VIX, and the options boys by proxy, refuse to
confirm any correction underway. SENTIMENT has fallen to 56%-bulls and that could allow some movement upward.
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.
