THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
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Monday, March 3, 2014
ISM Manufacturing…Margin Debt Another All-time High
MANUFACTURING IMPROVES (Briefing.com)
“In a role reversal, the ISM Manufacturing Index improved
in February to 53.2 from 51.3 in January….The data have thus not been either a
good forecasting tool or a good read on current conditions during this business
cycle. It must be recognized that the index is not hard data of any kind, but
simply a survey that provides broad indications of trends.”Full story and charts at Briefing.com at…http://www.briefing.com/Investor/Calendars/Economic/Releases/napm.htm
NYSE MARGIN DEBT HITS NEW HIGH (dShort.com)
High margin has a correlation with market tops and Doug Short notes that
margin debt peaked in the summer of 2007, about 3-months before the S&P
500.He wrote: “There are too few
peak/trough episodes in in this overlay series to take the latest
credit-balance trough as a definitive warning for U.S. equities. But we'll want
to keep an eye on this metric in the months ahead.” – Doug Short.Full commentary and charts at Advisor
It is difficult to see how the Russia move in the Ukraine will affect
stocks, so there isn’t much point in guessing.Unless the US convinces the world to enact severe economic sanctions, or
we go to war, I think it won’t have much impact.Much of Europe is dependent on Russia for oil
and gas so sanctions likely won’t have much teeth PERSPECTIVE
“No country has the right to send troops into another country
un-provoked.” – President Obama, 3 March 2014
Too bad President George Bush wasn’t intelligent enough to understand
that basic concept of sovereignty before he ordered an invasion of Iraq.That action made it much more difficult for
the US to rally the world against Russia in this situation and it is why the
Russian press is calling the U.S. “hypocrites” and worse.
MARKET REPORT Monday, the S&P 500 was down about 0.7% to 1846 (rounded). VIX rose about 14% to 16.02. The yield on the 10-year Treasury Note fell to 2.6% as
investors bought bonds.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing fell to 56%
at the close.(A number above 50% for
the 10-day average is generally good news for the market.) New-highs outpaced new-lows Monday, leaving
the spread (new-highs minus new-lows) at +58. (It was +201 Friday). The 10-day moving
average of change in the spread was minus-7. In other words, over the last
10-days, on average, the spread has decreased by 7each day. The internals are neutral.
Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late.They are most useful when they diverge from
the Index.In 2013, using these
internals alone would have made a 16% return vs. 30% for the S&P 500 (in on
Positive out on Negative – no shorting).Of course, few trend-following systems will do well in an extreme
low-volatility, straight-up year like 2013.
The NTSM system switched to HOLD today, Monday,
MY INVESTED POSITION
I am about 50% invested in stocks because I upped my
stock holdings by 10% on Friday, 28 Feb.That’s fully invested for me at least as far as long term money
goes.This is a suitable stock
allocation for a balanced portfolio.Since bonds are yielding very little now, I will consider adding more to
stocks later in the month.