CHINA WOES AFFECTING
COMMODITIES (Wall Street Journal)
“The U.S. Department of Agriculture confirmed that China
has canceled orders for 517,000 metric tons of soybeans, used to make cooking
oil, and compares to imports of 63.4 million tons last year. South American
soybean contracts have also been canceled because of weak demand, says trade
journal Oil World. The cancellations are
a big worry for the commodity markets as exporters around the world had relied
for years on China's insatiable appetite for a wide range of raw ingredients.
But now as jitters rise over the health of the economy, the fallout is rippling through
into agricultural commodities, just weeks after the price of copper and
iron ore tumbled on worries they had been used in risky Chinese
financing deals.” Full story
(for subscribers only) at…http://online.wsj.com/news/articles/SB10001424052702304688104579464772427185240?mod=rss_world_markets&mg=reno64-wsj&cb=logged0.8409845478869479
(The WSJ is a great newspaper that has a lot more info than just financials. My wife loves the art and fashion pieces. My obligatory plug.)
iSHARES MSCI USA MOMENTUM FACTOR ETF SUGGESTS CORRECTION?
Perhaps. It is
underperforming the S&P 500 by nearly 5% in 1-month and 4% in the last 5-days
when compared to the S&P 500. The
talking heads on CNBC say this is a bad sign for the markets. The theory is
that if the momentum stocks (the high flying leaders) are failing, the rest of
the market is not far behind. The ETF is
MTUM
RON INSANA, FORMER BULL, BECOMES A BEAR (CNBC)
“I am becoming increasingly cautious on the stock market
for a variety of reasons: 1. There has been some meaningful technical deterioration in the market. Market leaders tech and biotech have become tech and bio-wrecks
The number of new highs has not broken out coincident with intraday all-time highs set last Friday in the S&P 500
The advance/decline line and up/down volume have not given extraordinarily positive signs amid the market's most recent rally.
2. There has been considerable froth in the IPO market, of late, often times a signature of a maturing bull-market move.” – Ron Insana. Commentary at…
http://www.cnbc.com/id/101531463
PALPABLE FOREBODING PERVADES THE MARKET (CNBC)
“There's a real sense that something foreboding may be
lurking just around the corner, said Jim Cramer. And the "Mad Money"
host isn't surprised. He says that since there have been so many conflicting
cross currents, investors just don't know which end is up.” Story and video at…http://www.cnbc.com/id/101532600
MY COMMENT ON THE 3-PRIOR STORIES: I have long observed that when everyone thinks one thing will happen on Wall Street, the opposite is much more likely, i.e., the markets will probably go up to new all-time highs. When the consensus becomes the market can’t fail…look out!
OVERRUN BY BARBARIANS (ZeroHedge)
“It has happened over and over again throughout
history. Nations, empires, and dynasties have made bad
economic decisions which lead to their own destruction. The scenario
usually goes something like this--one generation sacrifices and works hard to
overcome global challenges and creates an economic powerhouse, which in turn
allows it to project military power. Follow on generations take their
elders work for granted and ignore and even denigrate the fruits of hard labor,
they just want the benefits and start giving away the spoils for free. The next generation indulges
itself in sloth and corruption and is overrun by the barbarians…We
need to stop spending money we don’t have and…[t]he government needs to get out
the way. If you are in a hole and want to get out the first thing you
need to do is stop digging.” - L Todd Wood.
Commentary at… http://www.zerohedge.com/news/2014-03-27/guest-post-economic-weakness-creates-military-weakness
MARKET REPORT
Friday, the S&P 500 was UP (fixed a typo here) about 0.5% to 1858 (rounded).
VIX was down about 1.4% to 14.41.
The yield on the 10-year Treasury Note rose to 2.72%
indicating the bond-ghouls (as Louis Rukeyser used to call them) were less
worried.
RSI: 70 OR 39? (SELL OR HOLD?)
I commented yesterday (Thursday) that RSI was in the 30’s
(it was 39), but I have seen Trader Board discussions that the RSI was high
(70) and that indicated a sell.
Hmmm…What gives? It looks like
they are calculating RSI in intervals of 14, but the input is not a closing
value for the S&P 500, but rather a much shorter term value. They were apparently using the S&P chart
of Price at 10-minute intervals of the Index (or SPY) and thus the indication
of RSI of 70 is based on a shorter, day-trader value. If the RSI(14) was based
on a 10-minute value, one would get a single data point every 10-minutes and
14-data points every 2-hours and 20-minutes.
While this is valid as far as an RSI value is concerned for day-trading,
it is not going to be the same as an RSI(14) based on daily closes. Based on
closing data, today’s RSI is 43. This is
a neutral value.
S&P 500 IN A DOWN TREND? SORT OF…ON A SHORT TERM
BASIS
The S&P 500 has been generally falling since 7 March
and some are suggesting that the Index is now in a downtrend. Clearly the Index is trending down. Seems simple right? There is an important
component here that shouldn’t be ignored.
The percentage of stocks advancing is trending UP over the same time
frame at a very sharp upward angle. What
this means is that most stocks on the NYSE are advancing and the number
advancing is accelerating. These upward
moving stocks just are not the ones heavily weighted in the S&P 500. In most cases the S&P 500 will catch up
and begin advancing too, because the majority wins. As I noted yesterday, 10-day stats for Market
Internals are not confirming a correction.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE
was up to 54% at the close. (A number above
50% for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Friday. The spread (new-highs minus new-lows was +61. (It was +17 Thursday). The 10-day moving
average of change in the spread was +5. In
other words, over the last 10-days, on average, the spread has increased by 5 each
day. The smoothed 10-dMA of up-volume continued up today. The internals are positive. 
NTSM
The NTSM analytical model was HOLD today, Friday. The Price indicator is positive, because up
moves have been bigger than down moves recently. Sentiment, Volume and VIX
indicators are all neutral. The 5-10-20
Timer model is positive again because the 5-dMA and 10-dMA are both above the
20-dMA.
MY INVESTED POSITION
I increased my stock allocation to 50% invested in stocks
on 26 March because of the NTSM indicators turned positive Monday (24 Mar) at
the close. Further the 5-10-20 Timer
was positive along with market internals on 26 March as they are today, 28
March.
