TALK OF LESS TAPERING IS CAUSING TIGHTER CREDIT – NO
MATTER WHAT THE FED SAYS (Bloomberg)
“By just talking about adding stimulus at a slower pace,
Federal Reserve Chairman Ben S. Bernanke sent bond yields a percentage point
higher. The rout serves as a warning to monetary policy makers that their exit
from record accommodation won’t be easy to control…Fed policy makers meeting
Sept. 17-18 will probably lower the monthly pace of bond purchases by $10
billion, to $75 billion, according to the median response of 34 economists in a
Bloomberg News survey on Sept. 6…The Fed is in a tricky spot, and housing has
got to be the driver of consumption in this country.” said Rick Rieder, co-head
for the Americas fixed income at BlackRock Inc. in New York, which has $3.86
trillion in assets. “The amount they’re going to taper has to be reduced.”… Central
bankers have an opportunity to reinforce their credibility by sticking with the
guidance Bernanke gave in June that QE3 won’t end before mid-2014, [Lou]
Crandall [chief economist at Wrightson ICAP ] said.” Story at…http://www.bloomberg.com/news/2013-09-17/less-tapering-becomes-tightening-credit-no-matter-what-fed-says.html
WALL STREET EXPECTS TAPERING WILL BE MODEST (Reuters)
“…The policy-making Federal Open Market Committee begins
its two-day meeting on Tuesday to discuss whether to scale back its monthly $85
billion in bond purchases, or quantitative easing, to aid the economy. Many
investors expect the Fed and its chairman, Ben Bernanke, will scale back
purchases by $10 billion a month while keeping rates close to zero for some
time.” Story at…http://finance.yahoo.com/news/stock-futures-slips-ahead-start-114901157.html
If that’s what Wall Street expects – that’s what the
independent Federal Reserve will give them.
MARKET REPORT
Tuesday, the S&P finished up 0.4% to 1705 (rounded) at the close.
VIX rose 1% to 14.53. (Again, the options boys are not confirming the
move up over the past couple of days; but they aren’t panicked either.)Tuesday, the S&P finished up 0.4% to 1705 (rounded) at the close.
Volumes have been falling since the end of June so volume trends aren’t showing
a lot of conviction for a strong uptrend either. The index is also creeping up to an area
relative to its 200-day moving avereage that has given it problems in the past.
At the all-time high in May at 1669, the index was 13% above its 200-dMA. The current all-time high for the S&P 500
is 1710, made just 6-weeks ago when the index was 11% above its 200-day Moving Average
(2% lower). Given that the S&P 500
is now 8% above its 200-dMA, the market may not have too much more upside left.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks
advancing on the NYSE was 60% at the close.
(A number above 50% for the 10-day average is generally good news for
the market.)
New-highs outpaced new-lows today, Tuesday,
leaving the spread (new-hi minus new-low) at +123 (it was +206 Monday), with
the 10-day moving average of change in spread still positive.
The Internals are positive on the market in
the short term.
NTSM
Tuesday, the overall long-term NTSM analysis
remains 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.
