“U.S. housing starts jumped in April and building permits hit their highest level in nearly six years, offering hope that the troubled housing market could be stabilizing. The Commerce Department said on Friday groundbreaking increased 13.2 percent to a seasonally adjusted annual pace of 1.07 million units, the highest level since November 2013.” Story at…
http://www.reuters.com/article/2014/05/16/us-usa-economy-idUSBREA4E0F920140516
VIX has been awfully calm and many have suggested that the VIX is broken. I have had concerns that my VIX indicator might not be working. Here’s an interesting take on the subject.
IS THE VIX BROKEN (Seeking Alpha)
“So is the VIX "broken"? Absolutely not. It is
reflecting much higher than average complacency in the SPX options market. What
traders are doing, seemly reflexively at this point since they've been trained
over and over again, is selling any volatility that comes along. 2013 up to the
present has been a volatility sellers' paradise, where these short volatility
positions rarely come back to bite them.”
Commentary at…
http://seekingalpha.com/article/2222273-the-vix-is-not-broken-contrary-to-popular-belief
MARKET REPORT
Friday, the S&P 500 rose about 0.4% to 1878 (rounded).
VIX fell about 6% to 12.44.
The yield on the 10-year Treasury Note rose slightly to 2.52% at the close.
The Bond Ghouls are still worried.
The S&P 500 bounced from its 50-day moving average Friday (now at 1868) as it has all thru 2013 and 2014. As of Friday, the 50-dMA is above the lower trend line. I’d be surprised if the index doesn’t at least decline to its lower trend line in the 1850’s. The index is still above the lower trend line shown blue in the 1-year chart below.
As I have been saying for a few days, since the S&P
500 finally moved above the old high of 1891, it needed to advance further or
the S&P 500 could be in real trouble.
“Further” in this case means that the index needs to break significantly above the red
line in the above chart. That is the
upper trend line since 31 Dec 2013...The
jury is still out.MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE increased to 50.3% at the close. (A number above 50% for the 10-day average is generally good news for the market.) In another reversal, New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +41 (It was -13 Thursday. 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 7 each day. The smoothed 10-dMA of up-volume remained DOWN today. The internals switched to neutral on the market today, but not by much. Only breadth is positive, and then, just barely.
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 remained a very
high 84%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected
Rydex/Guggenheim funds. (That was dip buying Wednesday.) On a statistical
basis, Sentiment is negative. Price, Volume
& VIX indicators are 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 (New Feature)--
ENSCO (ESV): HOLD
For discussion see: http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
Motley 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.”
