You never give me your shovel…
“With 391 companies in the S&P 500 reporting actual results for Q4 to date, the percentage of companies reporting actual EPS above estimates (77%) is above the 5-year average, while the percentage of companies reporting actual sales above estimates (58%) is slightly below the 5-year average. [THE]…earnings growth rate for Q4 2014 is now 3.1%. This growth rate is above the estimate of 1.7% at the end of the fourth quarter (December 31).” – FACTSET. Earnings Insight published by FACTSET at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_2.13.15/view
Looking good, Billy Ray!...Feeling good, Louis!
OIL RIG COUNTS DON’T MATTER (Bloomberg)
“Rig counts have long been used to help predict future oil and gas production…The total U.S. rig count is down 30 percent since October, an unprecedented retreat…But production isn't slowing yet. In fact, last week the U.S. pumped more crude than at any time since the 1970s.” Story at…
http://www.bloomberg.com/news/articles/2015-02-13/this-chart-shows-why-the-number-of-oil-rigs-may-not-matter-anymore
PE (FactSet Earnings Insight)
“The P/E ratio of 17.1 for the index as a whole is above the prior 5-year average forward 12-month P/E ratio of 13.6, and above the prior 10-year average forward 12-month P/E ratio of 14.1. ( At the sector level, the Energy (27.6) and Consumer Staples (20.0) sectors have the highest forward 12-month P/E ratios, while the Financials (13.5) and Telecom Services (14.3) sectors have the lowest forward 12-month P/E ratios.)” - FACTSET. Earnings Insight published by FACTSET at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_2.13.15/view
GREECE…I’M BAACK (CNBC)
“Talks between Greece and euro zone finance ministers over the country's debt crisis broke down on Monday when Athens rejected a proposal to request a six-month extension of its international bailout package as "unacceptable"…How long Greece can keep itself afloat without foreign support is uncertain. The euro fell against the dollar after the talks broke up…” Story at…
http://www.cnbc.com/id/102429071
Greece is not the worry it used to be because other European economies are stronger and it is less likely that US banks would be hurt by as Greek default. Since default and a Greek departure from the Euro is the worst outcome for all, it seems likely that some sort of deal will avert a full-fledged crisis.
MARKET REPORT
- Tuesday, the S&P 500 was up about 0.2% to 2100 (rounded).
-VIX rose about 8% to 15.80.
-The yield on the 10-year Treasury Note rose to 2.14%. The bond market is showing its optimism in stocks.
“Money that is coming out of bonds is flowing into stocks, which is why we are at record highs,” [Peter Cardillo, chief market economist at Rockwell Global Capital] said. Story at…
http://www.marketwatch.com/story/us-stocks-greek-deadlock-hits-futures-2015-02-17?dist=afterbell
Except for sentiment (which remains stubbornly high), everything looks quite bullish. RSI (Relative Strength Index) is not near overbought so it would appear this market can go higher. Counter to that optimism, VIX was up significantly today and decliners outpaced advancers: that usually is followed by a down day. There was a big move up very late in the day so perhaps Wednesday will not follow the norm and finish up.
WATCING THE RUSSELL 2000
The Russell 2000 pushed up to 1225 Tuesday and that’s a little past the prior high of 1223 Friday. That’s an important trend to watch. Some suggest that 2-consecutive closes above the prior high confirms a trend/breakout. Others claim 3 out of 5 days is required or even a break 3% above the old high. Regardless, the trend of new highs is bullish so far.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) declined to 56% at the close Tuesday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +133. (It was +185 Friday). The 10-day moving average of change in the spread was +3. In other words, over the last 10-days, on average, the spread has INCREASED by 3-each day.
Internals switched to neutral on the market because of low up volume.
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
Monday, the NTSM analysis is BUY. The PRICE, VOLUME & VIX indicators are positive; Sentiment is neutral. The more important BUY signal was in late October after the bottom and more recently 2-days after the mini-bottom on 20 January. Stock market direction from here is likely to be influenced by news as much as technical indications.
For now, things look good, but longer term indicators declined today too.
MY INVESTED STOCK POSITION
I remain fully invested at 50% invested in stocks in the long-term portfolio. 50% is conservative, but appropriate for a retired guy.
My position in the S&P 500 is very small now. I have invested in the Dow Jones US Completion Total (^DWCPF) instead, because that is the only small-cap choice in my retirement account. (The DWCPF includes all stocks EXCEPT the S&P 500.) I’ll be following this closely to see if the call works out. Some Pros disagree. I have no intention of remaining in smaller caps if they don’t outperform the S&P 500. So far, the DWCPF is 1.2% ahead of the S&P 500 in February.
