Tuesday, the S&P 500 was down about 0.2% to 1934 (rounded).
VIX fell about 0.7% to 14.13.
The yield on the 10-year Treasury Note was up slightly to 2.45% at the close; the bond Ghouls remain worried.
STOCKS ABOVE THEIR 200 DAY MOVING AVERAGE
The percent of stocks on the NYSE above their 200-dMA
rose slightly to 53% Monday (data is a day late). 61% is the trouble point for this stat. 61%
is the mean and I think that is over the past 3-years. So if the mean is 61% in a normally rising
market a value of 53% is a worrisome number.
If it drops below 50% it will confirm a correction well underway.
Chart at…
http://www.indexindicators.com/charts/nyse-vs-nyse-stocks-above-200d-sma-params-3y-x-x-x/RSI (14-day/SMA)
RSI was neutral at 30 as of Tuesday. Oversold is below 30.
BOUNCE OR CORRECTION OVER?
The S&P 500 stopped its decline on the lower trend
line of the upwardly trending channel last week. The Chart suggests the correction may be
over. VIX has fallen nearly 20% in a
little more than a week and that suggests the Options boys are less worried. There is some upward movement in late day
action on the S&P 500 so it would appear that the Pros are more optimistic Tuesday.
The Industrial Select Sector ETF (XLI) (a basket of cyclical industrial stocks)
has outperformed the S&P 500 recently suggesting the pros are also starting
to bet on no correction, or at least a postponement. I’d like to see the Internals improve before
I take on more risk with stocks. Internals have improved slightly, but not much
(as of Tuesday), so the Jury is still out on whether the pullback will
continue.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) was unchanged at 47% at the close Tuesday. (A number below 50% for the 10-day average is
generally BAD news for the market. The
average in a normally rising market is 53%.)
New-highs still outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +19.
(It was +59 Monday) The 10-day moving average of change in the spread was minus-3.
In other words, over the last 10-days, on average, the spread has DECREASED by
3 each day. Internals remained neutral on the market, but only UP
volume kept the Internals from being negative.
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. All Indicators are now neutral.
MY INVESTED POSITION
I reduced my investment in stocks to 30% on 1 August because
of the NTSM indicators turned negative at the close on 31 July. 30% invested protects the portfolio. If there
is a 50% crash I would only lose 15% of the portfolio value. At the same time, if the market goes up, I
will make some gains. No system is perfect and the NTSM system has
underperformed a buy and hold strategy in the Fed driven market currently in
place.--INDIVIDUAL STOCKS FROM A VALUE HOUND--
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
