“Chicago PMI accelerated in May, according to the Chicago business barometer released Friday . It rose to 65.5 in May from 63.0 in April, beating the MarketWatch-compiled consensus of 62.1. It is the highest level of the PMI since October.” Story at…
http://www.marketwatch.com/story/chicago-pmi-accelerates-in-may-2014-05-30?link=MW_latest_news
MICHIGAN SENTIMENT (Fox Business.com)
“A monthly gauge of U.S. consumer sentiment fell in May
as a gloomy view on income growth clouded an otherwise positive economic
outlook, a survey released on Friday showed. The Thomson Reuters/University of Michigan's final May
reading on the overall index on consumer sentiment came in at 81.9, down from
84.1 the month before." Story at...
http://www.foxbusiness.com/economy-policy/2014/05/30/consumer-sentiment-falls-in-may/
FED OFFICIAL: RAISE RATES SOONER AND FASTER (Reuters)
“Kansas City Federal Reserve Bank President Esther George
said Thursday…that the Fed should start to raise rates "shortly
after" it ends its current round of bond-buying, and that rate rises
should be steeper than many now expect…The
Fed is on target to phase out bond-buying completely by this coming fall.”
Story at…http://www.reuters.com/article/2014/05/30/us-usa-fed-george-idUSKBN0EA05E20140530?feedType=RSS&feedName=businessNews
George is a hawk and probably doesn’t represent the majority of Fed members.
CORRECTION WHEN RATES RISE (CNBC)
“When the Federal Reserve starts to increase interest
rates, which could happen before the end of the year, "I do think there's
a correction waiting for us out there," Joy [David Joy, chief market
strategist at Ameriprise Financial] said in a "Squawk Box" interview. "It doesn't
have to be that severe," he continued, "maybe somewhere between 5
percent and 10 percent ... in the fourth quarter or so." That won't be the
end of the bull market, though, he added.” CNBC video and transcript at… http://www.cnbc.com/id/101717817
MARKET REPORT
Friday, the S&P 500 rose about 0.2% to 1924 (rounded).
VIX fell about 1.5% to 11.40.VIX remains at a point that has recently aligned with the start of corrections, but it is falling so on the whole I think it is good news for the time being.
The yield on the 10-year Treasury Note rose slightly to 2.48% at the close.
The Bond Ghouls remain worried.
PERCENT OF STOCKS ABOVE THEIR 200-dMA
That stat was 63% as of Thursday and that is good for the
bulls. 61% has been an area that has
caused problems in the past. Get today’s value (available later tonight after I
post this blog.) here…http://www.indexindicators.com/charts/nyse-vs-nyse-stocks-above-200d-sma-params-3y-x-x-x/
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE
was 60% at the close Friday. (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 +145 . (It was +154 Thursday.) The 10-day moving
average of change in the spread was +16. In other words, over the last 10-days, on
average, the spread has INCREASED by 16 each day. The smoothed 10-dMA of up-volume
was UP today. The internals remain
positive on the market today.
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.
NTSM
The NTSM analytical model for LONG-TERM MONEY remained
HOLD Friday. Sentiment fell to 71%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Thursday. 71%-bulls
is still a high number, but on a statistical basis, Sentiment is now
neutral. Price, Volume & VIX
indicators also remain neutral.
I increased my stock allocation to 50% invested in stocks on 26 March because of the NTSM indicators turned positive 24 Mar at the close. 50% in stocks is fully invested for me, given my age (semi-retired) and the risk inherent in today’s stock market. I am watching closely to see if it is time to reduce my long-term stock holdings.
--INDIVIDUAL VALUE STOCKS--
ENSCO (ESV): BUY
The chart looks OK with higher lows and today it made a higher high on
the 1-month chart so I again rate ESV as BUY. It doesn’t hurt that it was
upgraded to Buy on 27 May by The Street.com. For my initial discussion see the NTSM blog at:http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
ENSCO benefited from an upgrade of Diamond Offshore 29 May by Morgan Stanley and was up 2% on the day. Morgan Stanley upgraded Diamond Offshore to equal weight. They said, “Our Underweight thesis based on significant negative earnings revisions has largely played out. We also believe that the cycle is turning and that floater availability has peaked.”
TESARO (TSRO): BUY
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/gdp-contractsjobless-claims.html[28 May 2014] BMO Capital upgraded Tesaro (NASDAQ: TSRO) from Market Perform to Outperform with a price target of $46.00. Posted at…
http://www.streetinsider.com/Upgrades/BMO+Capital+Upgrades+Tesaro+(TSRO)+to+Outperform/9071511.html
Research has shown that to have a diversified portfolio no one stock should be more than 4% of the portfolio total, or stated another way, if your total portfolio consisted of individual stocks, you would need at least 25-stocks to be “diversified.”
