Chart from Federal Reserve annotated by Charles Hugh
Smith at…[Beginning]…around 2009…Expanding debt and leverage no longer boosted wages. For the first time in 30 years, juicing debt and leverage did not push wages higher--rather, wages declined or stagnated, despite trillions of dollars of Fed stimulus, near-zero interest rates and all the other tricks of financialization. The returns on additional debt and leverage have diminished to near-zero. This is the endgame of financialization: expanding debt and leverage no longer move the needle on wages and household income. Rather, adding more debt is weighing on wages.”- Charles H Smith “Of Two minds” blog at…
http://www.oftwominds.com/blogmar15/credit-wages3-15.html
This was the conclusion of Rheinhart-Rogoff’s provided in their book, “This Time is Different.”
MARKET REPORT
-Monday, the S&P 500 was up about 0.4% to 2079.
-VIX was down about 0.9% to 15.06.
-The yield on the 10-year Treasury Note was down to 2.19%.
PULLBACK?
The XLI (a basket of cyclical industrial stocks) improved handily today relative to the S&P 500. Generally, that’s a bullish sign, but I really don’t like the falling new-high/new-lo data with new-lows exceeding new-highs. That, along with other internals, looks to be signaling a continued down move.
The percentage of stocks above their 200-day moving average dropped to 51% Friday and is falling sharply. That is below a number that has suggested trouble ahead for the markets. I still doubt that the S&P 500 will drop below the 200-dMA of 2001 (if it gets that far); that is about 3.9% lower than today’s close
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 48% at the close Monday. (A number below 50% is usually BAD news for the markets.) In a reversal, New-lows outpaced New-highs Monday. The spread (new-highs minus new-lows) was minus -32. (It was +5 Friday). The 10-day moving average of change in the spread was minus-17. In other words, over the last 10-days, on average, the spread has DECLINED by 17-each day.
Internals remained negative on the market and are continuing to deteriorate.
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 long-term indicator remained HOLD. The PRICE indicator is positive. UP-moves have been much larger than down recently and that has pushed PRICE to a positive indication. VIX, VOLUME and SENTIMENT indicators are neutral, although sentiment remains extremely high.
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. 
