“The U.S. economy contracted in the first quarter for the first time in three years as it buckled under the weight of a severe winter, but there are signs activity has since rebounded. Commerce Department on Thursday revised down its growth estimate to show gross domestic product shrinking at a 1.0 percent annual rate.” Story at…
http://www.reuters.com/article/2014/05/29/us-usa-economy-idUSKBN0E918F20140529?feedType=RSS&feedName=businessNews
Most economists expect that this slowdown was weather related and there are already signs of acceleration in the current (2nd) quarter; so does the Fed. From CNBC: “Federal Reserve Bank of Richmond President Jeffrey Lacker said he expects a positive GDP reversal in the second quarter.” CNBC story at…
http://www.cnbc.com/id/101714739
JOBLESS CLAIMS (Briefing.com)
“The initial claims level fell to 300,000 for the week
ending May 24 from a slightly upwardly revised 327,000 (from 326,000) for the
week ending May 17. The Briefing.com consensus expected the initial claims
level to fall to 318,000… If claims can stabilize at 300,000, it would be
indicative of payroll growth closer to 300,000 per month than the 200,000 we
had been expecting in the past.” Charts and commentary at…https://www.briefing.com/Investor/Calendars/Economic/Releases/claims.htm
MARKET REPORT
Thursday, the S&P 500 rose about 0.5% to 1920 (rounded).VIX fell about 1% to 11.57.
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 2.46%
at the close.The Bond Ghouls remain worried.
BOND MARKET DISBELIEF (Global Economic Analysis)
“My take is the economy is poised to decelerate, not take
off as most seem to think.” - Mike "Mish" Shedlock. Commentary at…http://globaleconomicanalysis.blogspot.com/2014/05/us-economy-poised-to-accelerate-bond.html
That is certainly not a consensus view.
PERCENT OF STOCKS ABOVE THEIR 200-Dma
That stat was 63% as of Wednesday 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 58% at the close Thursday. (A number above 50% for the 10-day average is generally good news for the market.) New-highs outpaced New-lows Thursday. The spread (new-highs minus new-lows) was +154. (It was +106 Wednesday.) The 10-day moving average of change in the spread was +11. In other words, over the last 10-days, on average, the spread has INCREASED by 11 each day. The smoothed 10-dMA of up-volume was UP today. The internals switched to 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 Thursday. Sentiment fell to 73%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Wednesday. 73%-bulls
is still a high number, but on a statistical basis, Sentiment is now
neutral. Price, Volume & VIX
indicators also remain 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 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
I was ready to recommend Tesaro (NOT Tesoro) to Buy not long ago (I didn’t) and the stock shot up 20% in one day based on good news related to one of its cancer trials. It has pulled back since then but today was up early in the day so I was a buyer. Tesaro is a biopharmaceutical company in the oncology field with no earnings and no dividend so this is not normally on my radar, but the chart looks like the stock bottomed. It has strong institutional ownership (TR Price, Vanguard, Alliance Bernstein, etc.) and good analyst ratings with a mean target of $57, more than 100% above today’s closing price. On the negative side, there is no guarantee that this company will ever make a dime so tread cautiously. Limit the size of a position and do your own due-diligence.
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.”
