“Art Cashin said it appears the stock market's recent
strength ‘is more than just a reflex rebound’ and could have legs but it's
still too soon to know for sure. Cashin, UBS' director of floor operations at
the NYSE, told CNBC's Dominic Chu around midday that he's not seeing the
caution flags that could signal the beginning of a broader move lower.” Story
and Video at…
http://www.cnbc.com/id/101569758Art’s biggest concern looking ahead seems to be the elevated profit margins that may be unsustainable.
RATE RISE WILL BE SLOWER – FED OFFICIALS
“Several Federal Reserve policy makers said a change in
their forecast for the main interest rate exaggerated the likely speed of
tightening, according to minutes of their March meeting…’I don’t think there’s
any doubt that it’s obviously on the dovish side,’ said Jacob Oubina, a senior
U.S. economist at RBC Capital Markets LLC in New York. ‘We didn’t think it
would be so aggressive in terms of walking back this shift that we’ve seen in
the projections.’
http://www.bloomberg.com/news/2014-04-09/several-fed-officials-said-forecasts-overstated-rate-rise-pace.htmlSome of the Market angst experienced recently was due to Fed Chair, Jane Yellen’s statement that rates would rise 6-months after QE ends. The above is walking back the rate rise and was seen as good news for the markets.
NO RECESSION FOR YEARS? THE BET IS ON? (Global Economic
Perspectives)
“One by one the bears and the rational thinkers throw in
the towel. Economist Robert Shiller is the latest to drink the Kool-Aid. As
noted by Business Insider
Shiller tweeted the following about a post from White House Council of Economic
Advisers Chair Jason Furman on various economic indicators: "Furman's blog
chart 4 of hours worked in manuf suggests, with new record high of 42, no
recession for years to come…”…Shiller should know better than to make such statements. I propose a $5,000 bet with Robert Shiller right now, donated to our favorite charity that he is wrong.” Mish Shedlock. Commentary at... http://globaleconomicanalysis.blogspot.com/2014/04/shiller-drinks-kool-aid.html
MARKET REPORT
Wednesday, the S&P 500 was up about 1.1% to 1872 (rounded).
VIX was down about 8% to 13.77 (at 4:05 PM).
The yield on the 10-year Treasury Note moved up slightly to 2.69%.
There had been late-day selling for 3-straight-sessions,
but Tuesday there was a little late day buying and that pattern of buying followed thru on
Wednesday so the pros are betting on a bounce.
VIX was down enough to suggest that the options boys are
done with the “correction” at least for a little while. New-high new-low data also was looking more
positive and for that matter, all of the market internals improved. The size of the move up was the only concern.
Today was a statistically significant up-day since it
exceeded my price and volume statistical parameters. This would usually (about 62% of the time) be
followed by a down day on Thursday. This type of action can happen because
investors holding short positions need to get out of their shorts as the market
rises. To short the market, one must
borrow the shares to short. Closing short positions means that shares must be
bought and that pushes the index higher.
It is the norm to see a statistically significant day after a market
turn. This suggests a turn back down on
Thursday, but I’d go with the VIX and the Market Internals and guess we may trend
a bit higher before the S&P 500 gets back into correction mode even if
tomorrow is down a little.
CORRECTION POSTPONED?
All in all…it appears the correction may have been postponed.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE
improved to 58% at the close. (A number above
50% for the 10-day average is generally good news for the market.) New-highs
outpaced new-lows Wednesday. The spread
(new-highs minus new-lows was +70. (It
was +18 Tuesday). The 10-day moving average of change in the spread was +2. In other words, over the last 10-days, on
average, the spread has INCREASED by 2 each day. The smoothed 10-dMA of
up-volume was up today too. The
internals switched to positive on the market.
NTSM
The NTSM analytical model remained HOLD Wednesday. Sentiment was up slightly to a screaming high
84.2%-bulls my highest reading ever (5-dMA of {bulls/(bulls+bears)} for funds
invested in selected Rydex/Guggenheim funds. The VIX, Price & Volume indicators
are all neutral, but they all improved on the day.
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. 50% is fully invested for me at this time.
