“Four Federal Reserve officials with varied voting records on monetary stimulus indicated greater willingness this week to begin tapering the central bank’s bond-buying program, citing confidence the economy is accelerating.” Story at….
http://www.bloomberg.com/news/2013-08-08/fed-officials-signal-tapering-is-possible-at-september-meeting.html
7th TIME WAS NOT THE CHARM S&P TESTS 1700
AND DUMPS (ZeroHedge)
“For the 7th time in the last day or so, the S&P 500
has tested up to the magical 1,700 level and failed. With JPY once against
strengthening as carry unwinds re-escalate, we wait breathless for a deja deja deja vu repeat of
the last 3 days post-European close rampfest...” Full story at…http://www.zerohedge.com/news/2013-08-09/7th-time-was-not-charm-sp-tests-1700-and-dumps
It seems simple enough: if the markets can’t go up (past
1700) they must go down.
I previously linked an article on Investment Watch Blog
about the high margin debt. (See…http://investmentwatchblog.com/what-do-1929-2000-and-2007-all-have-in-common-whenever-margin-debt-goes-over-2-25-of-gdp-the-stock-market-always-crashes/ )
Here’s another one from Zerohedge, on BUBBLES AND MARGIN DEBT that reports on a Deutsche Bank study regarding margin debt, crashes, with the related news coverage prior to each crisis.
STOCK MARKET BUBBLES AND MARGIN DEBT (ZeroHedge)
It is well-known that as part of the S&P 500's ascent
to new records, investor margin debt has also surged to
all time highs, surpassing for the past three months previous records set
during both prior, the dot com and the housing, stock market bubbles.
And as more attention has shifted to the topic of
speculator leverage once more, inquiries into the correlation between bets upon
bets and stock performance are popping up once more, in this case in a study by
Deutsche Bank titled "Red Flag! - The curious case of NYSE margin debt."
Of particular note here is a historical comparison of
margin-debt warnings that have recurred throughout history but especially just
before major stock bubble crashes, such as in the period 1999/2000, 2007/2008
and of course today…As DB says, "we prepared a collection of press
articles which were published around the key events during the past financial
crises. Our key finding is straight forward. Irrespective of the publishing
date, the articles read alike throughout the two major crisis periods, i.e. the
“new technologies market equity bubble” (1999-00) and the “Great/Global
Financial Crisis” (2007-08). Most interestingly, literally the same content can be
found in todays’ press.” Full story
(with press examples) at ZeroHedge at...
http://www.zerohedge.com/news/2013-08-09/stock-market-bubbles-and-record-margin-debt-repeating-history-ignoring-all-warnings
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks
advancing on the NYSE remained 46%. Usually
a value below 50% signals additional trouble for the markets. 49% of stocks on
the NYSE were advancing today.
New-highs minus new-lows (spread) was
positive today, again, but the change in spread was trending down. Generally, I’d
say the internals are weak and giving a downward signal, but not a very strong
one.
MARKET REPORT
Friday, the S&P was down 0.4% to 1691 (rounded).
VIX was UP 5% to 13.41. Friday, the S&P was down 0.4% to 1691 (rounded).
Cyclical stocks are outperforming the S&P 500, so investors think
there is NO chance of recession any time soon.
Still, as we noted in Wednesday’s blog (COLAS: TIME TO GET
BEARISH ON STOCKS), earnings are a concern.
NTSM
Friday, 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.
