Excerpt from the weekly Petroleum Status report of the US Gov’t: “U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.4 million barrels from the previous week. At 434.1 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.” Report available at…
http://www.eia.gov/petroleum/supply/weekly/
If inventories continue to rise, there is a very real possibility that there won’t be any place to put the excess crude. Prices will then collapse. I saw a trader on CNBC yesterday say that prices would continue to rise because so much supply had been taken out of the system based on rig counts. (This goes against the WSJ story of 17 Feb that stated the opposite. See…
http://navigatethestockmarket.blogspot.com/2015/02/earnings-oil-well-rig-counts-dont.html )
Something doesn’t add up, “U.S. crude oil production climbed to 9.29 million barrels per day, the highest figure on record in weekly data and the highest figure since 1973 in monthly data.” Based on this story at…
http://fuelfix.com/blog/2015/02/25/eia-u-s-crude-inventories-grow-again/
Bottom line: If inventories continue to build, the price must come down.
MARKET REPORT
-Wednesday, the S&P 500 was down about 0.1% to 2114 (rounded).
-VIX rose about 1% to 13.84.
-The yield on the 10-year Treasury Note remained 1.97%.
RSI reached overbought territory again on Wednesday rising to 82 – a bearish indication for the short term.
Volume remained low again today, Wednesday, and was about 13% below the monthly average. This isn’t a bullish indication though I can’t say when the market may break down based on this stat.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 54% at the close Wednesday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Wednesday. The spread (new-highs minus new-lows) was +135. (It was +170 Tuesday). The 10-day moving average of change in the spread was +9. In other words, over the last 10-days, on average, the spread has INCREASED by 9-each day.
Wednesday there were more advancing stocks than declining so I’d expect Thursday to be an up-day. Usually, the S&P 500 will follow the direction of the majority of stocks
Internals remained neutral on the market, but they are not trending one way or another so it is wait and see time.
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
Wednesday, the NTSM analysis remained HOLD. The PRICE indicator is positive; VIX, VOLUME and SENTIMENT indicators are neutral, although sentiment remains extremely high.
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.)
Some Pros disagree, but so far
it has worked out. Since I made the
call, at the end of January, the DWCPF is 1.7% ahead of the S&P 500.
I am looking at shifting some funds into the EAF ETF (Europe and Far East) at the end of the month. The US is expensive compared to the rest of the world and the EAF bottomed 9 Jan 2014. This is the only foreign investment available in my retirement account.
