Friday, August 29, 2014

29 August 2014 Stock Market report and Stock Market Analysis

OVERALL STRATEGY  AND CASH POSITIONS
In response to several comments, here is my general investment strategy for non-stock positions.  As a semi-retired person, I am currently “fully” invested roughly as follows:
50%-Stocks (primarily ETF’s with S&P 500 in the retirement account)
25%-Short-term Bonds (mutual fund)
25%-Junk Bonds (mutual fund)
The bond percentages are rough, since I still have small positions in GNMA and a few other bond funds, just to keep the accounts open.  I sold most of them last year (too early) when the yields started rising.
 
Junk bonds tend to act like stocks and will fall in a declining economy so if I suspect a major crash, I’ll sell High-yield bonds too.  (That’s because there is default risk in high-yield funds if the economy is slowing.) Junk is currently more at risk because so many people have piled into it, there could be a panic to get out.
 
When I sell stocks for NTSM sell signals, I move excess cash to a Money Market fund, so if I am 50% invested in stocks, and switch to 30% invested, the difference is going to money market fund. If is suspect a significant crash, I will short using the cash from stock sale.
 
Last, 50-50 is a balanced portfolio for those close to, or in retirement.  A conservative rule of thumb is to limit stock investments to the percentage defined by “Your Age minus 100.”  If you are 30, that would give a 70% allocation to stocks.  I have a former co-worker who is about 50-years old who maintains 100% in stocks and always has.  He has a strong tolerance for risk.  Remember, it’s your money and only you can really decide how much is “fully-invested” for you.  If you are worrying about your investments, or losing sleep, you probably have too much in the stock market.
 
MARKET REPORT
Friday, the S&P 500 was up about 0.3% to 2003 (rounded).
VIX was UP about 0.8% to 12.15. 
The yield on the 10-year Treasury Note was up slightly to 2.34% at the close; the bond Ghouls remain worried.  (This may actually be foreign demand driving down yields rather than fear of an economic decline.)
 
Volume was nearly normal; it was only about 5% below the average for the month. Art Cashin, CNBC, suggested that traders were covering short positions for the weekend and that led to more volume and a good day for stocks.
 
There has been late-day buying for the past few days and that is positive.
 
RSI (14-day SMA) was 88 Friday at the close. (It was 88 Thursday, too, but I reported the RSI calculated using a different methodology by mistake.) 70 is the overbought value for this indicator.
 
The S&P 500 reached its upper trend line today on the charts so that could make for some choppy trading next week as the summer ends and traders get back to business.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 59% at the close Friday.  (A number above 50% for the 10-day average is generally GOOD news for the market.  The average in a normally rising market is 53%.) New-highs outpaced New-lows Friday.  The spread (new-highs minus new-lows) was +169 (It was +109 Thursday). The 10-day moving average of change in the spread was +10. In other words, over the last 10-days, on average, the spread has INCREASED by 10 each day.
 
Internals remained neutral on the market because the smoothed 10-dMA of UP volume continues to fall.  This may be the result of low volume overall. Low overall volume means that Up-volume is also low, so this may not be too meaningful now.  All other Internals look good.


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
Friday, the NTSM is HOLD.  The volume indicator is Positive. All pther indicators are neutral.

MY INVESTED STOCK POSITION
I made a BUY call on Monday, 18 August 2014 because the charts were looking better; therefore, I upped my invested percentage to 50% invested in stocks on Tuesday 19 August.  The 5-10-20 Timer and Market Internals both gave positive signals on 19 August confirming the previous day’s Buy signal. 50% is Fully invested for me since I am semi-retired.
                            --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
ESV has successfully tested its recent low as selling has declined at the low. Dividend is 6%. PE is 8.5 so downside is limited. I rate it BUY again even though you can find a lot of negative talk about the drillers.

Chicago PMI…Consumer Confidence…Personal Spending… Ukraine says Russia Invading

MARKET REPORT
I’ll post the daily Market Report and Market Analysis after the close. Here’s some news...
 
CHICAGO PMI (MarketWatch)
“Chicago PMI in August surged to a reading of 64.3 from 52.6 in July…We had speculated that July's downturn would prove temporary rather than signal the start of a downward trend…[this]…suggests that growth in the U.S. economy will continue apace in Q3," said Philip Uglow, chief economist of MNI Indicators…” Story at…
http://www.marketwatch.com/story/chicago-pmi-surges-to-643-in-august-regaining-lost-ground-2014-08-29

MICHIGAN CONSUMER CONFIDENCE (Fox Business)
The Thomson Reuters/University of Michigan's final August reading on the overall index on consumer sentiment came in at 82.5, up from 81.8 the month before…"Consumer confidence rebounded in late August due to a positive reassessment of prospects for the national economy," survey director Richard Curtin said in a statement.
http://www.foxbusiness.com/economy-policy/2014/08/29/consumer-sentiment-rises-in-august/

PERSONAL SPENDING (Briefing.com)
Personal spending fell 0.1% in July after increasing 0.4% in June. That was the first decline in spending since January. The consensus expected personal spending to increase 0.1%...consumers are continuing to delay consumption growth in order to increase their savings…Without an acceleration in income growth, sustainable consumption growth will be difficult.” Charts and details at…
https://www.briefing.com/Investor/Calendars/Economic/Releases/income.htm

UKRAINE SAYS RUSSIA INVADING (Reuters)
“Ukraine's president said on Thursday that Russian troops had entered his country in support of pro-Moscow rebels who captured a key coastal town, sharply escalating a separatist war and prompting anger and alarm among Kiev's Western allies. U.S. and British officials took strong issue with Russia's denials it had sent combat forces into Ukraine and threatened to impose stiffer economic sanctions on Moscow.” Story at…
http://www.reuters.com/article/2014/08/28/us-ukraine-crisis-idUSKBN0GS10C20140828

Thursday, August 28, 2014

28 August 2014 Stock Market Report and Stock Market Analysis

MARKET REPORT
Thursday, the S&P 500 was down about 0.2% to 1997 (rounded).
VIX was UP about 2.3% to 12.05.
The yield on the 10-year Treasury Note was down slightly to 2.33% at the close; the bond Ghouls remain worried.
 
Volume remains low; it was about 15% below the average for the month. RSI (14-day SMA) dropped back to 64 Thursday at the close.  70 is the overbought value for this indicator.
 
8 out of the last 10-days had been UP before Thursday’s down day so the result Thursday was somewhat expected. Internals remained neutral today.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell slightly to 57% at the close Thursday.  (A number above 50% for the 10-day average is generally GOOD news for the market.  The average in a normally rising market is 53%.) New-highs outpaced New-lows Thursday.  The spread (new-highs minus new-lows) was +109 (It was +145 Wednesday). The 10-day moving average of change in the spread was +5. In other words, over the last 10-days, on average, the spread has INCREASED by 5 each day.
 
Internals remained neutral on the market because the smoothed 10-dMA of UP volume continues to fall.  This may be the result of low volume overall. Low overall volume means that Up-volume is also low, so this may not be too meaningful now.  All other Internals look good.


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
Thursday, the NTSM is HOLD.  The volume indicator is Positive. All pther indicators are neutral.


MY INVESTED STOCK POSITION
I made a BUY call on Monday, 18 August 2014 because the charts were looking better; therefore, I upped my invested percentage to 50% invested in stocks on Tuesday 19 August.  The 5-10-20 Timer and Market Internals both gave positive signals on 19 August confirming the previous day’s Buy signal.
                            --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
ESV has successfully tested its recent low as selling has declined at the low. Dividend is 6%. PE is 8.5 so downside is limited. I rate it BUY again even though you can find a lot of negative talk about the drillers.

GDP UP…Jobless Claims Down…Stock Market Nearing a Top (Gee, we’ve heard that before!)

MARKET REPORT
I’ll post the daily Stock Market Report and Market Analysis after the close. Here’s some news...
 
GDP UP (Forbes)
On Thursday, the Bureau of Economic Analysis released its second estimate of real gross domestic product for the second quarter of 2014 — covering April, May and June of this year. The release showed output in the U.S. increasing at an annual rate of 4.2%. This is relative to the first quarter when real GDP declined a sharp 2.1%... “I’ll take it,” said Dan North, chief economist at Euler Hermes North America…of the 4.2% growth in a call following the release. But North warns GDP watchers should not get too excited. The revisions reveled “nothing earth shattering.” Story at…
http://www.forbes.com/sites/samanthasharf/2014/08/28/u-s-gdp-grew-4-2-in-the-second-quarter-2013-up-from-first-estimate/

JOBLESS CLAIMS DOWN (Reuters)
“The number of Americans filing new claims for unemployment benefits fell for a second straight week last week, underscoring the strengthening labor market fundamentals. Initial claims for state unemployment benefits slipped 1,000 to a seasonally adjusted 298,000 for the week ended Aug. 23, the Labor Department said on Thursday… Job growth has topped 200,000 for six consecutive months, a stretch last seen in 1997…” Story at…
http://www.reuters.com/article/2014/08/28/us-usa-economy-idUSKBN0GS1G220140828

STOCK MARKET NEARING A TOP (CNBC)
“The relationship between Americans' wages and the stock market's total value could be signaling a peak, TrimTabs Investment Research Chairman Charles Biderman told CNBC on Thursday. But in the near-term, he's still bullish—saying the market is "rigged because of zero interest rates."… Meanwhile, researchers at Rutgers University said they found that Americans are more anxious about the economy now than they were right after the Great Recession ended.” Story at…
http://www.cnbc.com/id/101954407
When everyone thinks the stock market is going to do one thing, it does another.  The recent calls for a major crash above (and yesterday by Tice and Doolittle) mean a crash is less likely.  A correction in the 10% range is expected. Crash?...possible, but not likely right now.

Wednesday, August 27, 2014

27 August 2014 Stock Market Report and Stock Market Analysis…Doolittle and Tice Predict a Stock Market Crash

50-60% CRASH (CNBC)
“Markets could soon face a fall of up to 60 percent, two experts told CNBC on Wednesday…A jolt to international confidence in central banks will lead to a 30 to 60 percent market decline, David Tice, president of Tice Capital and founder of the Prudent Bear Fund, told CNBC's "Power Lunch…The Fed's low interest rates could bring a ‘scary’ 50-60 percent market correction, said technical analyst Abigail Doolittle…I think it could come on a crash similar to what happened in 2007," Doolittle, the founder of Peak Theories Research, said on ‘Squawk Box’.” Story at…
http://www.cnbc.com/id/101950613
Yes, it could happen, but the timing may be more than a year away if it occurs at all. My guess is that such a crash is only likely after the FED begins raising interest rates sometime in 2015.
 
CRACKS IN THE UPTREND – A FEW, BUT DON’T WORRY; BE HAPPY
RSI (14-day SMA) was 93 Wednesday at the close.  70 is overbought for this indicator.  8 out of the last 10-days have been UP for the S&P 500 so a down day would not be a surprise tomorrow. Internals remained neutral today. I’ll be surprised if the markets can get through October without some sort of correction, at least in the 10% area.
 
On the bull side there was some late-day buying today and that broke a recent trend of late day selling.
 
MARKET REPORT
Wednesday, the S&P 500 was UP one-tenth of 1-point, remaining essentially unchanged at 2000 (rounded).
VIX was UP about 1.3% to 11.78. 
The yield on the 10-year Treasury Note was down slightly to 2.36% at the close; the bond Ghouls remain worried.
 
Volume remains low; it was about 17% below the average for the month.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose slightly to 59% at the close Wednesday.  (A number above 50% for the 10-day average is generally GOOD news for the market.  The average in a normally rising market is 53%.) New-highs outpaced New-lows Wednesday.  The spread (new-highs minus new-lows) was +145 (It was +171 Tuesday). The 10-day moving average of change in the spread was +10. In other words, over the last 10-days, on average, the spread has INCREASED by 10 each day.
 
Internals remained neutral on the market because the smoothed 10-dMA of UP volume continues to fall.  This may be the result of low volume overall since that means that Up-volume is also low, rather than a meaningful indicator.  All other Internals look good.

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
Wednesday, the NTSM is HOLD.  All indicators are neutral.

MY INVESTED STOCK POSITION
I made a BUY call on Monday, 18 August 2014 because the charts were looking better; therefore, I upped my invested percentage to 50% invested in stocks on Tuesday 19 August.  The 5-10-20 Timer and Market Internals both gave positive signals on 19 August confirming the previous day’s Buy signal.
                            --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
ESV has successfully tested its recent low as selling has declined at the low. Dividend is 6%. PE is 8.5 so downside is limited. I rate it BUY again even though you can find a lot of negative talk about the drillers.