“The arrival of former Bank of Israel Governor Stanley Fischer and former U.S. Treasury official Lael Brainard will add two strong voices to back Chair Janet Yellen's view that loose monetary policy needs to be extended to turn around a slack labor market…Interviews with former colleagues and a review of their public statements and published material also suggest both will want the Fed to remain in activist mode long after its current programs wind down and its bloated balance sheet shrinks.” Story at…
http://www.reuters.com/article/2014/05/19/us-usa-fed-nominees-idUSBREA4I02G20140519?feedType=RSS&feedName=businessNews
I commented yesterday on divergence between the Russell, Nasdaq and S&P 500. I could have saved myself some trouble if I had just picked up the following story…
CORRECTION COMING: GARTMAN (CNBC)
"As the Dow continues to make new highs, yet the
Russell, the Nasdaq seem to be showing signs of weakness, it is a little
disconcerting to me," said Gartman on CNBC's "Fast Money."… In Monday's issue of
"The Gartman Letter," Gartman wrote, "With each passing day, we
are more and more fearful too that a correction of some very real magnitude is
hard upon us as the broader market indices such as the Russell and the NASDAQ
have now 'failed' well below their previous highs and as upward sloping trend
lines cast back into last year have been broken through to the downside."
– Dennis Gartman, Gartman Letter.
Commentary at…
http://www.cnbc.com/id/101686974
20% CORRECTION COMING – ROSS (CNBC)
“We’ve been above trend for far too long. It’s been four
years since we’ve had a close below the 150-day moving average. We have to go
back to 2003 – 2007 to find a similar run,” said Rich Ross of Auerbach Grayson.
“The stage is set for a serious 10 percent correction. Maybe even 20 percent”… Still,
just because history or logic says something should happen doesn’t mean it
will…” Posted at Yahoo Finance at…http://finance.yahoo.com/blogs/talking-numbers/an-incredible-explanation-for-the-relentless-stock-rally-221545525.html
15-20% DROP WHEN QE ENDS (CNBC)
“When the Federal Reserve ends its latest bond-buying quantitative easing program, stocks could drop
15 percent to 20 percent, said Peter Boockvar, chief market analyst at The
Lindsey Group. That's how much the
market dropped when the Fed ended QE1 and QE2, Boockvar said in an interview on
CNBC's ‘Squawk Box.’” Story and video at…
http://www.cnbc.com/id/101688725
SUGGESTIONS OF A CORRECTION
-The Percentage of stocks above their 200-day moving
average continues to fall.-Up-volume is falling. Volume over all is falling. Perhaps we are running out of buyers
-Statistical analysis shows complacency and a “calm-before-the-storm” level of market activity. (This is an accurate indicator, but declines have been small (5% or so) in 2013 and 2014.
-VIX fell to 12.16 at the S&P 500 top on 13 May. That is a level at which pull-backs have started recently, although pullbacks have been small. VIX is up 7% since then, but that is not a huge rise. While the rise in VIX has not generated a sell signal in the NTSM VIX indicator, it is worrisome.
-Tuesday, the S&P 500 Bounced from the 1868 50-dMA during the day and moved up in the late day trading. The computers are at work, and perhaps the computers will manage to stop the correction again.
MARKET REPORT
Monday, the S&P 500 fell about 0.7% to 1873 (rounded).
VIX rose about 4% to 12.96.
The yield on the 10-year Treasury Note fell slightly to 2.51%
at the close.
The Bond Ghouls are still worried.
The S&P 500 Index has close within 1% of its all-time
high 18-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 Tuesday. The spread
(new-highs minus new-lows) was +35. (It was +92 Monday.) The 10-day moving
average of change in the spread was minus-1. In other words, over the last 10-days, on
average, the spread has DECREASED by 1 each day. The smoothed 10-dMA of up-volume
turned UP 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 Tuesday. Sentiment 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.”
