1st Bear: “My porridge is too cold.”
2nd Bear: “My porridge is too cold.”
3rd Bear: “My porridge is too cold.”
Sorry, but the following 3-bears all sound the same. Sooner or later they will be right.
ANALYZING EARNINGS (Advisor Perspectives)
“…reported earnings dropped from $26.48 to $24.79 or 6.82% from the 4th quarter. However, despite the drop in both operating and reported earnings for the quarter, trailing twelve months earnings per share rose from $107.30 to $108.85, a 1.42% increase, on an operating basis.” [How? Share-buy-backs.]Lance Roberts closed with: “The ongoing deterioration in earnings is something worth watching closely…with the Affordable Care Act about to levy higher taxes on individuals, it is likely that a continuation of a "struggle" through economy is the most likely outcome. This puts overly optimistic earnings estimates in jeopardy of being lowered further in the coming months ahead as stock buybacks slow and corporate cost cutting becomes less effective.” – Lance Roberts. Analysis, commentary and more, guest-post at…
http://www.advisorperspectives.com/dshort/guest/Lance-Roberts-140602-Earnings-Update.php
WEEKLY VIEW FROM HUSSMAN (Hussman Funds)
“In my view, investors should be thinking very seriously about the extent of potential market losses over the completion of the present market cycle. It is the wrong question to ask “where else am I going to put my money with short-term interest rates near zero?” The problem with that question is that it carries the implicit assumption that the expected return on stocks is even positive or adequate given the prospective risks. At present, the better question is ‘do I prefer a zero loss to the prospect of a 40-60% interim loss in a market that is strenuously overbought and overbullish, and has returned to valuations that are more than double reliable historical valuation norms?’” – John Hussman, Phd, Weekly Market Commentary at…
http://www.hussmanfunds.com/wmc/wmc140602.htm
SAXO BANK CIO: EXPECT A 30% CORRECTION (Investing.com)
“I think the low comes in economically in Q1 and Q2 in 2015. Every single macro indicator you can find will bottom at Q1/Q2. For the equity market, I think the top is 1900/1950. But you can't both predicted [SIC] the level and the timing. And I’m more confident about the timing, not the level. So my timing I’m confident, and the timing I am confident on is the fact that the second half of this year is going to see a 30% correction from the top.” - Steen Jakobsen, Chief Investment Officer of Saxo Bank.” Story and video at…
http://www.investing.com/analysis/saxo-bank-cio:-expect-a-30-stock-market-correction-in-2014-214616
HUSSMAN CORPORATE PROFITS TWEET (John Hussman, Phd)
Analysis and more at…http://globaleconomicanalysis.blogspot.com/
FACTSET EARNINGS INSIGHT EXCERPT (Factset)
“On Thursday [May29], the S&P 500 closed at yet another all-time high value (1920.03). Looking at the market through the lens of corporate earnings, it appears the recent increase in value is not due to the results reported for Q1, as S&P 500 companies only recorded modest earnings growth (2.1%) for the quarter. However, the market may be looking ahead to projections of more robust earnings growth in future quarters, particularly the 2nd half of 2014. For Q2 2014, analysts are call for earnings growth of 5.7%. Earnings growth rates are then expected to jump to 9.6% in Q3 2014 and 10.1% in Q4 2014. But, should the market have confidence that corporations will meet the expectations of analysts for higher earnings growth in the second-half of the year? Have analysts been accurate in recent years in their projections for earnings growth in the second half of the year at this point time? Based on the track record of the past four years, the answer to both questions is no.” Analysis at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_5.30.14/view
OFF TOPIC - BERGDAHL THE HERO? (Reuters)
“’He walked away from his guard post while on duty,” said former Private First Class Jose Baggett, who served in Bergdahl’s company. “Then we lost men looking for him. I’m not saying he should not be back in America but he has done nothing heroic. The people who died looking for his dumb ass – they are the heroes.’” Story at…
http://www.reuters.com/article/2014/06/03/us-usa-afghanistan-bergdahl-families-idUSKBN0EE07O20140603
MARKET REPORT
Tuesday, the S&P 500 about 1Pt. to 1924 (rounded).
VIX fell about 2.5% to 11.87. VIX remains at a point that has recently aligned with the start of corrections. MOTLEY FOOL: “The last time when we had a sustained period of values lower than today's [May 30 value of 11.40] was October 2006 through February 2007. Perspicacious readers will have noticed that period roughly coincides with the height of the credit bubble, during which investor (over)confidence was extraordinarily high.” Commentary at…
http://www.fool.com/investing/general/2014/05/29/the-vix-mystery-heres-why-volatility-is-so-low.aspx
The yield on the 10-year Treasury Note rose to 2.60% at the close.
The Bond Ghouls remain worried.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE
fell to 55% at the close Tuesday. (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 +130. (It was +190 Monday.) The 10-day
moving average of change in the spread was +4. In other words, over the last 10-days, on
average, the spread has INCREASED by 4 each day. The smoothed 10-dMA of up-volume
was UP today. The internals switched to
neutral on the market today due to New-high/New-low data. 
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 rose to 71%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds at the close on Monday. This reverses a recent downward trend so there is some dip-buying today. 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.htmlENSCO 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.”
