“Federal Reserve officials discussed rate hike procedures at a joint meeting, but agreed the discussion does not signal rate action is coming soon. That was one of the key data points from the minutes of the FOMC meeting, released Wednesday. The Fed discussed the right mix of tools to control rates and board members agreed a mix of tools is likely needed to normalize rates. ‘Participants generally agreed that starting to consider the options for normalization at this meeting was prudent, as it would help the committee to make decisions about approaches to policy normalization and to communicate its plans to the public well before the first steps in normalizing policy become appropriate,’ the minutes said.” Full story and video at…
http://www.cnbc.com/id/101693821
No new information was presented about when they may raise rates.
GARTMAN: CORRECTION NOW (CNBC)
“The stock market is in the midst of a correction,
closely followed investor Dennis Gartman told CNBC on Wednesday. ‘I think the
process began several weeks ago … [with] the Nasdaq,’ the publisher of The Gartman
Letter said in a ‘Squawk Box’ interview. ‘We're in a
correction right now.’" From Yahoo Finance at…http://www.cnbc.com/id/101692211?__source=yahoo%257cfinance%257cheadline%257cheadline%257cstory&par=yahoo&doc=101692211%257cWe%27re+in+a+stock+%27correct
DOES MARGIN DECLINE INDICATE A CORRECTION? PERHAPS. (Advisor Perspectives)
“The New York Stock Exchange publishes end-of-month data for margin debt... The astonishing surge in leverage in late 1999 peaked in March 2000, the same month that the S&P 500 hit its all-time daily high, although the highest monthly close for that year was five months later in August. A similar surge began in 2006, peaking in July 2007, three months before the market peak….the April data shows a continuation of a decline that began in March. It will be interesting to determine in the months ahead if this is a brief pause in demand or was beginning of a major trend reversal.” – Doug Short. Commentary, charts and analysis at…
http://www.advisorperspectives.com/dshort/updates/NYSE-Margin-Debt-and-the-SPX.php
As Doug points out in the piece, the margin debt peak and decline happened in 2000 and 2007 at prior peaks.
MARKET CALM IS A WORRY TO BANKERS (Bloomberg)
“Twenty-four hours of warnings were led by Federal
Reserve Bank of New York President William Dudley’s acknowledgment that the
slide in market volatility ‘makes me a little nervous.’ Bank of England Deputy
Governor Charlie Bean said conditions were “eerily reminiscent” of the
pre-crisis era, while Bundesbank board member Andreas Dombret said ‘we do see
risks despite the fact that the markets are calm.’” Story at…http://www.bloomberg.com/news/2014-05-21/what-lurks-beneath-market-calm-unnerves-central-bankers.html
E-BAY HACKING ALERT (CNBC)
“E-commerce company eBay said client identity information including
emails, addresses and birthdays was stolen in a hacking attack between late
February and early March. EBay urged users to change their passwords after the
attack on a database that also contained encrypted passwords, physical addresses
and phone numbers. It said it found no evidence of any unauthorized access to
financial or credit card information.” Story at… http://www.cnbc.com/id/101692205
% OF STOCKS ABOVE THEIR 200-DAY MOVING AVERAGE (dMA) (Index Indicators)
This number is available after I post this blog so the following is
Tuesday’s chart and value. The
percentage declined again and showed that 57% of all stocks on the NYSE were
trading below their 200-dMA as of Tuesday’s close. From the chart below, it appears that values
below the mean of 61% (and declining) represent problems for the markets.
(Reporting this number to four significant figures seems silly to me.) With a current
value of 57% and falling more steeply this looks like trouble especially if the
trend continues.
CHART FROM…http://www.indexindicators.com/charts/nyse-vs-nyse-stocks-above-200d-sma-params-3y-x-x-x/
MARKET REPORT
-Wednesday, the S&P 500 fell about % to 18 (rounded).-VIX fell about 8% to 11.93 (at 4:09).That value is low and I had to go back to August of 2013 to find a lower value of VIX. (VIX was 11.84 on 5 August and the S&P 500 fell 5% afterward.) VIX is now at a point that has recently aligned with the start of corrections. A falling VIX is usually good news so I think the correction connection has more to do with simple market cycles. In other words, I don’t think a VIX at this level is a great indicator for a pullback; it is, however, a value that has preceded pullbacks in 2013 and 2014.
-The yield on the 10-year Treasury Note ROSE slightly to 2.54% at the close.
The Bond Ghouls are still worried.
The S&P 500 Index has closed within 1% of its all-time high 19-times since 1 Jan 2014. This number has changed slightly as the market made new highs. Still, the “stalling” market is disconcerting and the Index must make significant new-highs or the correction will be underway.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE
remained to 52% 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 +57. (It was +35 Tuesday.) The 10-day moving
average of change in the spread was flat. In other words, over the last 10-days, on
average, the spread has not changed each day. The smoothed 10-dMA of up-volume turned
DOWN today, but just barely. The
internals remained neutral on the market today and they are a mixed bag without
direction at this point.
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 Wednesday. Sentiment fell slightly,
but remained a very high 84%-bulls (5-dMA of {bulls/(bulls+bears)} for funds
invested in selected Rydex/Guggenheim funds. On a statistical basis, Sentiment
is negative. Price, Volume & VIX
indicators are neutral.
MY INVESTED POSITION
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 (New Feature)--
ENSCO (ESV): HOLD
For discussion see:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.htmlMotley Fool suggests that the owners of floating rigs have overbuilt and rig-rentals and revenues will fall in the future. Commentary at…
http://www.fool.com/investing/general/2014/05/13/these-offshore-drillers-have-made-a-big-mistake-2.aspx
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.”
