“North American freight shipments and expenditures continued
to buck the historic trend and increased in May. The first five months of 2014
were the strongest since the end of the great recession. While this seems
counter to the dismal GDP reading for the first quarter, which shows a one
percent drop or a contraction in the economy, much of the decrease in GDP can
be attributed to declining inventories, slowing exports and weather‐related
issues. Many other economic signs, especially growth in the manufacturing
sector, point to an uptick in the five‐year recovery and a continued
increase in freight movements.” Press release at…
http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
MARKET REPORT
Monday, the S&P 500 was up about 0.1% to 1951 (rounded).
VIX rose about 4% to 11.15. VIX remains at a point that
has recently aligned with the start of corrections. The yield on the 10-year Treasury Note rose slightly to 2.61% at the close.
The Bond Ghouls remain worried.
RELATIVE STRENGTH INDEX (RSI)
RSI remained a high 74 Monday suggesting an overbought
condition. Overbought conditions can
persist, but many put great faith in RSI and it is a warning that conditions
are ripe for a pullback.
The S&P 500 is now about 8% above its 20-dMA. 10% often indicates a short term top so it
looks like this rally still has legs.
STOCKS ABOVE THEIR 200-dMA
The NYSE %-of stocks above their 200-day moving average
was 67% Friday and has been generally moving up for a couple of weeks. 61% is a level that has been trouble in the
past. This measure of the market is not
calling for a pullback, however, some further movement up in the percentage
would be good to convince me that the down trend in this statistic is over.
Chart available at…
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
rose to 59% at the close Monday. (A number
above 50% for the 10-day average is generally good news for the market.) {As a
point of interest (not a prediction) the 2010 value right before a 16%
correction was 59%. Whether this turns
out to be a similar “too much of a good thing” remains to be seen.}
New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +285.
(It was +345 Friday.) The 10-day moving average of change in the spread was +19
In
other words, over the last 10-days, on average, the spread has INCREASED by 19 each
day. The smoothed 10-dMA of up-volume was UP today and internals are positive
on the market.
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 Monday. Sentiment remained 74%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Thursday. This value was 85%-bulls on 19 May. Sentiment,
Price, Volume & VIX indicators all 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 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. 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
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/gdp-contractsjobless-claims.html[28 May 2014] BMO Capital upgraded Tesaro (NASDAQ: TSRO) from Market Perform to Outperform with a price target of $46.00. Posted at…
http://www.streetinsider.com/Upgrades/BMO+Capital+Upgrades+Tesaro+(TSRO)+to+Outperform/9071511.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.”
