"The ISM Non-manufacturing Index fell to 53.9 in November from 55.4 in October. The Briefing.com consensus expected the ISM Non-manufacturing Index to drop to 55.4…The market generally doesn't pay much attention to the services index because the services sector is less cyclical than the manufacturing sector. To that end, October marked the 46th consecutive month in which economic activity in the non-manufacturing sector has expanded.” Story and charts at Briefing.com at
http://www.briefing.com/Investor/Calendars/Economic/Releases/napmserv.htm
ISM MANUFACTURING UP (Bloomberg)
“Manufacturing grew in December at the second-fastest
pace in more than two years, fueled by a gain in orders that will help propel
the U.S. expansion. The Institute for Supply Management’s factory index eased to 57 from the prior
month’s 57.3, which was the highest since April 2011…” Story at…http://www.bloomberg.com/news/2014-01-02/u-s-ism-manufacturing-index-fell-to-57-in-december-from-57-3.html
UNEMPLOYMENT CLAIMS UP AND TRENDING IN THE WRONG DIRECTION
(dShort.com)
“The Unemployment Insurance Weekly Claims Report was
released this morning for last week. The 339,000 new claims number was a 2,000
decline from the previous week’s 341,000, an upward revision from 338,000.”
Charts and analysis at…http://advisorperspectives.com/dshort/updates/Weekly-Unemployment-Claims.php
SENTIMENT INDICATOR AT RECORD (ZeroHedge)
“With over 60%
of those surveyed by Investors Intelligence now bullish,
positive sentiment (or crowding, depending on your perspective) has risen once
again and now to levels that are practically the highest ever. Perhaps even
more crucial is the absolute dearth of bears leaving the Bull-Bear ratio at a record-busting level over
4x. The
simple question, as we asked before, is - what happens when there's no one left
to buy from?” Additional chart at…http://www.zerohedge.com/news/2014-01-02/bulls-got-moar-bullish-er
At 83%-bulls as of Tuesday, my sentiment value is slightly more than 5 to 1 bulls, the highest I have seen since data was available going back to 2003 for the Rydex/Guggenheim funds I use as a sentiment indicator.
Here’s another discussion on the question: “Are we now in
a new secular Bull-Market? Quick answer
– No.
SECULAR BULL AND BEAR MARKETS (dShort.com)
Doug Short presents an interesting and thoughtful
analysis of inflation adjusted data. In
the analysis he concluded: “Given the unprecedented demographic headwinds for
today's investors, I'm unable to share…confidence that the US is now in a new
secular bull market.” For the full
analysis see Advisor Perspectives at…http://advisorperspectives.com/dshort/updates/Secular-Bull-and-Bear-Markets.php
The following chart is from Doug short’s analysis noted above. On a strictly “regression-to-the-mean” analysis, the S&P Composite is very high now.
Chart and discussion in the same article I linked above,
but I’ll link it here again at…
http://advisorperspectives.com/dshort/updates/Secular-Bull-and-Bear-Markets.php
MARKET REPORT
Thursday, the S&P 500 was down 0.9% to 1832 (rounded).
VIX was up about 4% to 14.23.
-The 10-year Treasury Note fell most of the day and closed
at 2.99% yield, below the 3% “trouble-for-stocks” level. (Doug Short has
detailed Treasury Yield history at…
http://advisorperspectives.com/dshort/updates/Treasury-Yield-Snapshot.php)-NYSE Volume was above normal so the Holiday is over.
-Final numbers showed that today was NOT a statistically significant day in price/ volume.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing 59% at the
close Thursday. (A number above 50% for
the 10-day average is generally good news for the market.) New-highs outpaced new-lows Thursday, leaving
the spread (new-hi minus new-low) at +53 (it was +229 Tuesday). The 10-day moving average of change in the
spread was +6. In other words, over the last 10-days, on average, the spread
has increased by 6 each day.
Market internals remained neutral on the market. The up-volume has been trending down and that
prevents the internals from a positive reading.
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 S&P 500 was 10.1% above the 200-dMA at the close
Tuesday and a value of 10% has led to small pullbacks in 2013 (and corrections
in 2011 and 2012). That stat fell to 9%
above the 200-dMA Thursday. The S&P
500 is only 2% above the 50-dMA so it looks like any pullback would be small.
Sentiment is extreme bullish and that is a negative for
the market. Other indicators are all
neutral of positive. It won’t take much to start a short-term pullback, because
investors are nervously sitting on big gains from last year. Perhaps a
correction started today – time will tell.
My New Year’s resolution is to stop trying to predict short term moves
in the markets…I’ll give that up tomorrow I’m sure!
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. I expect the markets to
pullback in the first quarter of 2014, but it remains to be seen whether it
will be another small buy-the-dip event or something more.
(A good rule of thumb for percent invested is to subtract
your age from 100 and put that amount into the stock market. Generally a minimum of 50%-50% stocks and
other investment is a reasonable value for the over 50-crowd; that’s my
group. With bond yields rising keep to
the short end of bonds, i.e., less than 10-year maturity or mutual funds that
focus on the short end.)
