“Reports from
the twelve Federal Reserve Districts suggest economic activity continued to expand across most regions
and sectors from late November through the end of the year. Nine Districts
indicated the local economy was expanding at a moderate pace; among these, the
Atlanta and Chicago Districts saw conditions improve compared with the previous
reporting period. Boston and Philadelphia cited modest growth, while Kansas
City reported the economy held steady in December. The economic outlook is
positive in most Districts, with some reports citing expectations of "more
of the same" and some expecting a pickup in growth.” Story at
http://www.businessinsider.com/federal-reserve-beige-book-january-2014-1
http://www.businessinsider.com/federal-reserve-beige-book-january-2014-1
SWISS BANK
WARNING – WILLIAM WHITE (UK Telegraph)
The Swiss-based `bank of central banks’ said a hunt for
yield was luring investors en masse into high-risk instruments, “a phenomenon
reminiscent of exuberance prior to the global financial crisis”. This is
happening just as the US Federal Reserve prepares to wind down stimulus and
starts to drain dollar liquidity from global markets, an inflexion point that
is fraught with danger and could go badly wrong. “This looks like to me like
2007 all over again, but even worse,” said William White, the BIS’s former
chief economist, famous for flagging the wild behavior in the debt markets
before the global storm hit in 2008. “All the previous imbalances are still
there.”… Mr. White said the world has become addicted to easy money, with rates
falling ever lower with each cycle and each crisis. There is little ammunition
left if the system buckles again. “I don’t know what they will do: Abenomics
for the world I suppose, but this is the last refuge of the scoundrel,” he
said.” Full story at...
Abenomics (Wikipedia): “…expand the economy of Japan…by a combination of measures
such as aggressive quantitative easing
from the Bank of Japan,
a surge in public
infrastructure spending, and the devaluation of the yen.” More at…
80,000 PAGES OF NEW REGLATIONS IN 2013 (Zerohedge)
“…the U.S. government issued more than 80,000 pages
of brand new rules and regulations last year on top of what we already
had. Even if we didn't have all of the other monumental
economic problems that we are currently facing, all of this
bureaucracy alone would be enough to kill our economy.” Commentary at…
The article went on to point out that Republican or
Democrat, it doesn’t seem to matter – the country is being buried with
burdensome rules and regulations.
MARKET REPORT
Wednesday, the S&P 500 was up 0.5% to 1848 (rounded). The S&P 500 has now clawed
its way back to where it finished the year on December 31st after
muddling around for 2-weeks.
VIX rose about 0.2% to 12.30.
The 10-year Treasury Note closed at 2.88% yield. Rates at
3% or above are considered by some traders to be “trouble-for-stocks”.
Today the S&P 500 made a double top, but of course
only time will tell if this is meaningful.
The Index may just power up from here; indeed, that is what the market
internals suggest. VIX is well contained so the options boys don’t expect a
correction. The Index just finished 2-weeks with range of less than 2% down. I expect the Index will climb a percent or so
and then falter, but let’s see. The
final Ben Bernanke FED meeting is 29 January – perhaps traders are waiting to
see if the FED really does intend to taper.
(They have signaled tapering will continue, so I think tapering each
month is a done deal.) If tapering
continues, the market may balk soon, but we may have to wait to see if the 3-steps-and-a-stumble rule applies to QE. (3-steps-and-a-stumble: 3-Fed tightenings usually causes a negative reaction in the markets.)
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing remained 54%
at the close Wednesday. (A number above 50%
for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Wednesday, leaving
the spread (new-hi minus new-low) at +231 (it was +92 Tuesday). The 10-day moving average of change in the
spread improved to 0. In other words, over the last 10-days, on average, the
spread has remained the same each day
Market Internals are a decent trend-following analysis of
current market action, but in 2013, if I had been buying the positive ratings and
selling negative ratings I would have under-performed a buy-and-hold strategy.
NTSM
The four areas of analysis, Sentiment, Price, Volume and
VIX haven’t changed and are currently rated as follows:
Sentiment remains screaming high, though slightly lower
than yesterday, at 81%-bulls (5-dMA of selected Rydex/Guggenheim funds) and
that’s a negative; Price is positive since up-days have been larger than
down-days over the past month; VIX and Volume remain neutral.
The most recent BUY signal for the NTSM system was 25
October. The “5-10-20 Timer” switched to
BUY from HOLD on 18 December.
MY INVESTED POSITION
I am about 30% invested in stocks as of 20 December
(S&P 500-1540) because I upped my stock holdings by 10% on the 20th
of December. Unless I get a SELL signal
in the NTSM system, I will continue to income-average (a little each month)
into the stocks to get my %-invested up to around 50% (max for me now) unless
there is a correction that would allow me to move in sooner and at a higher
percentage. Since that is my expectation, I have not upped my invested
percentage in one move as I normally would.
