“The U.S. consumer confidence index jumped to 90.9 in July, marking the highest level in seven years, from a revised 86.4 in June, the Conference Board said Tuesday.” Story at…
http://www.marketwatch.com/story/stock-trader-who-called-three-crashes-sees-20-collapse-2014-07-28?link=MW_story_popular
PENDING HOME SALES (Fortune)
“Pending home sales dropped in June,
retreating after three consecutive months of solid growth and the latest sign
the U.S. housing sector has suffered a setback as tight credit conditions and
flat wages deter many potential home buyers. The National Association of
Realtors’ pending home sales index, a forward-looking indicator based on
contract signings, slipped 1.1% in June from the prior month and was 7.3% below
last year’s level.” Story at…http://fortune.com/2014/07/28/pending-home-sales-june/
20% BEAR MARKET WITHIN ONE YEAR (MarketWatch)
“Mark Cook, a
veteran investor included in Jack Schwager’s best-selling book, “Stock Market
Wizards,” and the winner of the 1992 U.S. Investing Championship with a 563%
return, believes the U.S. market is in trouble…In simple terms, as stock prices
have gone higher, the NYSE Tick has moved lower. This divergence is an
extremely negative signal…Cook predicts that within 12 months, the
market will suffer a 20% or greater pullback.” Story at…http://www.marketwatch.com/story/stock-trader-who-called-three-crashes-sees-20-collapse-2014-07-28?link=MW_story_popular
Cook called crashes in 1987, 2000, and 2007.
MARKET REPORT
Tuesday, the S&P 500 was down
0.5% to 1970 (rounded). VIX rose about 6% to 13.28.
The yield on the 10-year Treasury Note fell slightly to 2.46% at the close.
CORRECTION NOW?
-The late day swoon in the S&P 500 is not a good sign
for the bulls.
-The percent of stocks trading above their 200-dMA fell
to 59% Monday (data is a day late) and that is below the mean of 61. This is a bearish sign.-Market Internals are negative. If the 10-dMA is below 50%-advancing (it is now 49%), the trend is down. Simply stated, most stocks have been falling over the last 10-days. (That could change with a big up day though.) This stat is typically around 53% in a normal rising market.
-The market has been too quiet with smaller than normal moves each day.
-At the recent top of 1985 (3 July 2014) the Index was at its upper trend line and it is due for a 5% pullback just as a normal cycle.
-The index made a triple top of 1985, 1987 and 1988 on 3 July, 23 and 24 July respectively and has pulled back 3-successive days.
Still, I haven’t seen that big short covering up-day that
would say, “The correction is NOW,”
but in fact it may well have already started.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) rose to 49% at the close Tuesday. (A number below 50% for the 10-day average is
generally BAD news for the market.) New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +48
Tuesday. (It was +25 Monday.) The 10-day moving average of change in the spread
rose to minus -3. In other words, over
the last 10-days, on average, the spread has DECREASED by 3 each
day. The smoothed 10-dMA of up-volume was DOWN today and the Internals remained
negative 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 Tuesday. Sentiment remained 76%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Tuesday (data is a day late). (84% is the current
negative level for the Sentiment indicator.) This value was 85%-bulls on 19
May. Price, Sentiment, Volume & VIX indicators are neutral, but all indicators
have deteriorated over the past 2-weeks.
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): HOLD (Earnings announce 31 July)
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
I like the dividend.
