BULL NEARING END (CNBC)
"...a pattern is emerging that was last seen in 2007, right before stocks
turned sharply lower. Largely, Sebastian [Mark Sebastian, the director of trading
and investments at Swan Wealth Advisors] notes that from 2002 until 2007, as
the S&P advanced, the VIX would spike, but when the spike was over, the VIX
would fall back. And when it fell back it would make lower and lower lows. That's
important: lower and lower lows....Sebastian says the pattern held for years, and as long as it held, the rally in
the S&P continued. However, in 2007,
after a big spike and subsequent pullback, the VIX failed to get anywhere near
its previous lows. Instead it reestablished itself at a much higher level. When
that happened, the bull was over. Turning attention to the current market,
Sebastian says the VIX is still making lower lows. Again, as long as the VIX
makes lower lows, the S&P 500 should continue to advance.” Full commentary
and Jim Cramer video at...
Not everyone
agrees with the above assessment. Chrsi
Puplava see signs of a Bottom!
| SIGNS OF A MARKET BOTTOM (Advisor Perspectives) "-Economic momentum is building -Market internals are stronger than headline indexes portray-Decade high percentage of "neutral" investors likely to capitulate to bull camp
-Investor trepidation about putting capital back to
work should take solace by signals from the smart money crowd.
|
http://www.advisorperspectives.com/dshort/guest/Chris-Puplava-140528-Signs-of-a-Bottom.php
THE LATEST FROM JOHN HUSSMAN, PhD (Hussman Funds)
“On the basis of measures that actually are reliably related to actual subsequent market
returns (and too many of Wall Street’s “valuation” measures aren’t
at all), S&P 500 valuations are presently more than 100% above pre-bubble
historical norms. In other words, stocks would be historically undervalued (in
the sense of being priced for long-term returns in excess of about 10%
annually) only after falling by half. That's not a forecast, but we also should
not rule that out, and low interest rates alone are not sufficient to prevent
that outcome in the event that investors seek higher risk premiums. Overly
compressed risk premiums are now the largest ticking time bomb in the global
financial environment.” – John Hussman, PhD, Weekly Market Commentary at…
http://www.hussmanfunds.com/wmc/wmc140526.htmHUSSMAN VIDEO: A VERY MEAN REVERSION (Global Economic Analysis)Here’s a link to Mike Shedlock’s website. He was a principal in the Wine Country Conference so you can watch a presentation direct from John Hussman regarding the market. Warning: John Hussman’s presentation is very technical. Presentation at…
http://globaleconomicanalysis.blogspot.com/2014/05/wine-country-conference-ii-videos.html
IS THE SMALL-CAP CORRECTION OVER?
I commented last week that the Russell 2000 seemed to have bottomed and
it was not at all clear that there would be a correction on the S&P
500. Usually, when the leaders get taken
out the Indices follow, but if the Russell was bouncing back this time might be
different. It still might be different,
but I looked at the iShares Russell 2000 ETF (IWM) again. The case for its bounce is the triple bottom
it completed on 20 May. I’m not buying
it. As a correction ends, volume should
be drying up as the selling slows.
Eventually there are no sellers left and an upward trend can
resume. The key is falling volume near
the bottom to indicate an exhaustion of selling. In the IWM, volume was increasing at the
bottom. The recent lows on the Russell
are likely to be tested again.
MARKET REPORT
Wednesday, the S&P 500 fell about 0.11 % to 1910 (rounded).
VIX rose about 1.5% to 11.68.
VIX remains at a point that has recently aligned with the
start of corrections.
The yield on the 10-year Treasury Note fell again to 2.44%
at the close.
The Bond Ghouls are very worried.
I know that many are suggesting that the low bond yield is no big deal because it just represents investors around the world seeking a decent yield. The argument here is that it doesn’t represent a concern for the US stock market – it is due to low yields elsewhere. OK…why are the yields poor elsewhere? The world’s economies are in bad shape. That is not good for US stocks in the long run.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE was 55% at the close Wednesday. (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 +106. (It was +187 Tuesday.) 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 was DOWN today, but just barely. The internals remained neutral on the market today.
NTSM
The NTSM analytical model for LONG-TERM MONEY remained HOLD Wednesday. Sentiment fell to 75%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds at the close on TUESDAY. That’s a lot and reflects that traders using the Rydex funds became less bullish on TUESDAY. 75%-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 VALUE STOCKS--
ENSCO (ESV): HOLD
The chart looks OK with higher lows, but I’d like to see some higher highs before I recommend this stock again, although it was upgraded to Buy on 27 May by The Street.com.
For my discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.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.”
