“New orders for U.S. factory goods fell for a fifth straight month in December, but a smaller-than-previously reported drop in business spending plans supported views of a rebound in the months ahead. Other data on Tuesday showing fairly brisk sales in January by the country's leading automobile manufactures…” Story at…
http://www.reuters.com/article/2015/02/03/us-usa-economy-idUSKBN0L71LG20150203
CORRECTION APPROACHING? - STOCKS ABOVE THEIR 200-dMA (IndexIndicators)
This chart is scary. Only about 45% of stocks in the NYSE are currently above their 200-day moving average. Add that to a chart of the S&P 500 where the index shows a trend of lower highs beginning December 29th and less than stellar earnings news. All together it looks like a recipe for stock market correction. If most stocks are below their 200-dMA, then sooner or later the S&P 500 will be dragged down below its 200-dMA. Then we may have a correction underway. The only good news is that the S&P 500 is only 4% above its 200-dMA so the fall may be limited in scope. It probably won’t be the major crash I see predicted by so many bearish pundits and bloggers, but this stat needs to reverse direction or there’s trouble ahead.
Chart from…http://www.indexindicators.com/charts/sp500-vs-nyse-stocks-above-200d-sma-params-3y-x-x-x/
MARKET REPORT
-Tuesday, the S&P 500 was UP about 1.4% to 2050 (rounded).
-VIX fell about 11% to 17.33.
-The yield on the 10-year Treasury Note rose to 1.79%. The word was risk on as stock buyers were out in force.
Today’s rally seemed to be related to Greece, where have not taken the expected hard line, and improved oil prices. It looks like oil made a bottom. If it follows a normal progression, I’d expect a bounce and retest of the prior low. To avoid that scenario the news would need to change. For example, demand needs to pick up or supply needs to fall.
Today was statistically significant day and that just means that it exceeded certain statistical parameters. That often gives a down day the next day, Wednesday. (The stats say down 62% of the time.)
The internals are now positive and one has to be optimistic on the technical data, but earnings news hasn’t been as great making a correction more likely. Long-term, I remain fully invested.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 58% 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 +167. (It was +107 Monday). 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 switched back to POSITIVE 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
Tuesday, the NTSM analysis is HOLD. The PRICE indicator is positive; the VIX indicator is negative; Sentiment and Volume are neutral.
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.
