Friday, October 25, 2013

Sentiment at 8-Month Lows

“Bloomberg Consumer Comfort Index declined to minus 36.1 in the period ended Oct. 20, the lowest since February, from minus 34.1. The report also showed more households were pessimistic about the economy than at any time in the past year even as lawmakers approved a deal that ended the partial shutdown of federal agencies.”  Story at…

“Following record UMich misses, Gallup's economic confidence collapse, the slump in the conference board's measure of confidence, and Bloomberg's index of consumer comfort signaling major concerns among rich and poor in this country (in spite of record highs in stocks), today's Consumer Confidence data from UMich continues to confirm a problem for all those 'hoping' for more multiple expansion. Falling for the 3rd month in a row, and missing expectations for the 2nd month in a row, this is the lowest confidence print in 2013.”  Story at…

Friday, the S&P up 4% to 1760 (rounded) at the close.
VIX fell about 0.8% to 13.09.

The 10-day moving average of stocks advancing dropped again to 60%.  (A number above 50% for the 10-day average is generally good news for the market.) 

New-highs outpaced new-lows, Friday, leaving the spread (new-hi minus new-low) at +221 (it was +200 Thursday).  The 10-day moving average of change in the spread fell to plus 6.  In other words over the last 10-days, on average, the spread has improved by +6 each day.

Market Internals remain Positive on the market for this short term indicator.

NTSM system switched to HOLD today, as the PRICE indicator dropped to hold because down moves in price and volume have been larger than up moves over the past month.

I still lean toward getting back in, after a pullback, to speculate on a final ride to the top.  NTSM did give several buy signals earlier this week, but the market just looks too frothy to rush back in…we’ll see if things look more positive later.

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.