The markets reacted to the European Markets, so news apparently trumped the technicals. “"It's the yo-yo action in Europe that we keep following, as they sold off, we sold off," said Peter Boockvar, chief market strategist at the Lindsey Group.” Story at…
http://www.cnbc.com/id/101902731?__source=yahoo%7cfinance%7cheadline%7cheadline%7cstory&par=yahoo&doc=101902731
MARKET REPORT
Thursday, the S&P 500 was down
about 0.6% to 1910 (rounded). VIX rose about 2% to 16.66. (Numerologists, be afraid: 666! {bad joke}
The yield on the 10-year Treasury Note dropped to 2.41% at the close; the bond Ghouls are more worried.
STOCKS ABOVE THEIR 200 DAY MOVING AVERAGE
The percent of stocks on the NYSE above their 200-dMA rose
slightly to 49% Wednesday (data is a day late).
61% is the trouble point for this stat.
RSI
RSI is oversold at 26 as of Thursday. Oversold is below
30.
BOUNCE TIME?
I expected a bounce yesterday, but instead the Index was
down again today. Sentiment is not acting like this is a pullback. The number of investors
betting long (%-bulls) is declining.
This indicates that there is little dip-buying going on. In pullbacks, sentiment peaks after the top
as the dip-buyers move in. Where are
those dip-buyers? Short-sellers may not want to hold over the weekend and with
RSI in Oversold territory, perhaps the bounce will start Friday. The S&P 500 is now 2.6% above its 200-dMA
and that usually offers strong support to a falling market. As of
Thursday’s close, the S&P 500 is 3.9% below its recent top of 1988 just
2-weeks ago. Technicals do not suggest
that the S&P 500 has made a permanent bottom yet, but we may still see a short-term
bounce anytime.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) remained 40% at the close Thursday. (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%.) Since 2009, the lowest I have seen
this stat was 29% in August of 2011 about 2-months before the Index bottomed so
%-advancing can go down a lot more.New-lows outpaced New-highs Thursday. The spread (new-highs minus new-lows) was minus-21. (It was minus-38 Wednesday.) The 10-day moving average of change in the spread remained minus -19. In other words, over the last 10-days, on average, the spread has DECREASED by 19 each day. The smoothed 10-dMA of up-volume was DOWN today and the Internals switched to 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 remaned
SELL Thursday. Indicators are as follows:
SENTIMENT: Sentiment remained neutral, but remains 74%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds at the close on Wednesday (data is a day late). (84% is the current negative level for the Sentiment indicator.) Sentiment was 85%-bulls on 19 May. While officially neutral, a Sentiment of 74%-bulls (nearly 3 out of every 4 investors betting long) is extremely high so I could easily call it negative. PRICE, VOLUME and VIX indicators are all negative. NTSM remains SELL.
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
