Tuesday, the S&P 500 was up 1.1% to 1839 (rounded).
VIX was Down about 8% to 12.28.
The 10-year Treasury Note closed at 2.87% yield. Rates at 3% or above are considered by some traders to be “trouble-for-stocks”.
As it turned out, today (Tuesday) was another statistically significant day in price/volume action based on statistical analysis of price/volume movement. These days are followed by a reversal about 60% of the time so a down-day is favored for tomorrow. As I noted earlier, choppy up-down movement in price of the S&P Index is typical at a top so we should watch to see if this up/down movement continues.
The big drop in VIX today indicates little fear in the markets, i.e., traders don’t think there is a correction coming. Up-volume had been trending down, but today it broke thru its upper trend line so this market internal is not suggesting a correction either.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing rose to 54%
at the close Tuesday. (A number above 50%
for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Tuesday, leaving
the spread (new-hi minus new-low) at +92 (it was +118 Monday). The 10-day moving average of change in the
spread improved to minus 4. In other words, over the last 10-days, on average,
the spread has decreased by 4 each day.
Again, the negative change in daily spread was the only negative in the
4-market internals I track, but without full agreement my market internal
indicator remained neutral on the market.
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 at 82%-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.
