MICHIGAN SENTIMENT FALLS (Business Insider)
“The headline index slipped to 81.3 from 82.5 in June…’The rise in gasoline prices was behind the dip in consumer confidence in July,’ said Capital Economics Paul Diggle. ‘But rising equity prices and the improving labour market should help consumer confidence to increase before too long.’" Story at…
http://www.businessinsider.com/u-michigan-consumer-sentiment-july-2014-2014-7
LEADING
INDICATORS UP (CNBC)
“A gauge of future U.S. economic activity rose in June,
supporting views of a stronger growth performance in the second half of the
year. The Conference Board said on Friday that its Leading Economic Index
increased 0.3 percent last month after an upwardly revised 0.7 percent rise in
May…"Broad-based increases in the LEI over the last six months signal an
economy that is expanding in the near term and may even somewhat accelerate in
the second half,'' said Ataman Ozyildirim, an economist at the Conference
Board.” Story at… http://www.cnbc.com/id/101848401
So where is the crash so many are talking about? Ans: Waiting for the FED to step on the brakes.
MARKET REPORT
Friday, the S&P 500 was up
about 1 % to 1978 (rounded).
VIX fell 17% to 12.06.
The yield on the 10-year Treasury Note was up slightly to 2.48% at the close.
CORRECTION WATCH
(1) No Correction: Market Internals are neutral after
Friday’s improvement. (2) Correction Now:
The Percentage of Stocks above their 200-dMA fell to 59.5% Thursday (data is a day late); as can be seen from the following chart, a fall below the mean of 61% is generally a trouble point for that stat.
Chart from… http://www.indexindicators.com/charts/sp500-vs-nyse-stocks-above-200d-sma-params-3y-x-x-x/
Statistically, the index is too “quiet” (as it has been
since mid-May) and a pullback is suggested anytime. Chart wise, the index moved
up to near the top of the 3-month chart upper trend line today (Friday) and
that could mean the Index is ready for (or already in) pullback mode.
We can look back to the high on 3 July and note that RSI
was oversold; Market Internals were deteriorating; late day trading was
trending down; the Index was 8.5% above its 200-day moving average (only 1.5%
below my “negative” level). Bottom line: Numbers are suggesting the S&P 500
is now in pullback mode. With the big up-day, Friday was statistically-significant
and technically suggests a down-day Monday (62% of the time). More importantly,
with the market nearing the upper trend line, this could be a reversal point
and, finally, start that pullback that has been predicted for nearly 2-years. Even if it is, I don’t expect a correction
greater than the 10-15% range and I wouldn’t be surprised if the S&P 500
went a bit higher, before we finally see that correction.
If the S&P 500 has another big up-day Monday, I will
short again.MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 47% at the close Friday. (A number below 50% for the 10-day average is generally BAD news for the market.) New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +100. (It was +49 Thursday.) The 10-day moving average of change in the spread rose to minus-7. In other words, over the last 10-days, on average, the spread has DECREASED by 7 each day. The smoothed 10-dMA of up-volume was UP today and the Internals switched to “neutral” 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 Friday. Sentiment remained 77%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Thursday (data is a day late). (83% is the negative level
for the Sentiment indicator.) This value was 85%-bulls on 19 May. Sentiment,
Price, Volume & VIX indicators are all 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): 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
Ensco has surpassed the mean and median analyst price targets so I rate it hold, but the 6% yield is worth owning.
