“In an unexpected move Friday, China's central bank cut interest rates. The rate cut is intended to jump start slowing growth. China's economic growth fell to a five-year low last quarter. Manufacturing and other key economic indicators have been weak. The People’s Bank of China said the move did not signal a change in monetary policy, and conditions in the world’s second largest economy are within an "appropriate range."
In Frankfurt, Mario Draghi, president of the European Central Bank, said the ECB will use more aggressive measures…to prevent the euro zone from falling into a new crisis…Stocks in the U.S. are poised for a fifth straight week of gains. But how long can this last? “We’re getting near the point of diminishing returns in terms of exactly how much more upside you can get for U.S. stocks from this kind of activity around the world,” [Yahoo Finance Senior Columnist Michael] Santoli says. “We’re already at a relatively pricey level.” Story and Video at….
http://finance.yahoo.com/news/as-global-central-banks-talk-stimulus--u-s--looks-to-do-opposite-151012538.html
BOLLINGER BANDS (Yahoo Finance)
“Today, the PBOC and the ECB both promised to provide greater liquidity to combat disinflation. US markets have gapped nearly 1% higher overnight as a result. Coming after 5 weeks of gains, this gap will push SPY above its weekly Bollinger Band (20,2). Above a Bollinger Band means that price is more than 2 standard deviations away from the mean. At least in theory, 95% of trading should occur within a Bollinger Band. Trading outside of the weekly band is usually significant…there is, at least historically, a good chance that some of these gains will be retraced in the next week, or that consolidation will follow.” Story at…
http://finance.yahoo.com/tumblr/blog-spy-is-above-its-weekly-bollinger-band-watch-out-for-151440305.html
My cmt: This was written before the markets opened so it is not clear that the Index closed above its 20-day, 2-std deviation Bollinger Band. It does point out that markets are stretched.
STATISTICALLY SIGNIFICANT DAY – WILL THE MARKETS EVER GO DOWN?
Friday was statistically-significant in my system, because the size of the day’s move was larger than the recent normal as measured by standard deviation from the norm. That implies Monday would be a down-day about 62% of the time. Further, since the S&P 500 is now above its upper trend line, one would expect to see some downward pressure on stocks; maybe not. Next week is a Holiday week and that is usually a VERY positive time for stocks so it is hard to say if traditional methods of stock analysis will hold true.
WHERE’S THE PULLBACK?
Market Internals have improved over the last 2-days. Given the Holiday next week, stock markets may simply drift up until after Thanksgiving and fall some before the next Holiday season kicks in. Shorts may get squeezed all Thanksgiving week. That’s my guess. We’ll see what happens Monday.
MARKET REPORT
Friday, the S&P 500 was up about 0.5% to 2064 (rounded).
VIX was down about 5% to 12.90.
The yield on the 10-year Treasury Note fell to 2.31 so the Bond Ghouls remain worried.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 53% at the close Friday. (A number above 50% is usually good news for the markets.) New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +192. (It was +56 Thursday). The 10-day moving average of change in the spread was +6. In other words, over the last 10-days, on average, the spread has increased by 6-each day. Internals switched to positive on the market based on strong moves yesterday and today.
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 long-term NTSM system analysis remained neutral Friday.
MY INVESTED STOCK
POSITION
I moved some funds back into the market on 17 October
2014 as a trade and increased my position
in stocks from 30% to about 40% overall.
I added more 20 Oct, to bring my stock investments up to 50%. I am
semi-retired, 50% is Fully-invested for me. I remain 50% invested in stocks.--INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY
The chart looks good and oil prices are close to a bottom so I think Ensco is again a Buy. See related video on this page…
http://finance.yahoo.com/q?s=esv&ql=1
Ensco price is going to reflect oil prices. If you think they are near a bottom, this is a great buy with high dividends. If not; it’s a dog.
