Cass Freight Index Up…Stock Market is a Screaming Buy - Bulls Should Rejoice…and then there’s John Hussman

CASS FREIGHT INDEX UP (Cass Information Systems)
“North American shipment volume and payments were up for the third month in a row. While first quarter GDP was an anemic 0.2 percent, it is not representative of the freight moving in the nation. Both the railroad and truck sectors reported increased loads in April. The strength of the U.S. dollar is boosting imports but hampering exports.” Press release at…
http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
My cmt: Makes one wonder why the Transport stocks are underperforming.
 
SCREAMING BUY - BULLS SHOULD REJOICE (MarketWatch)
“If this market was going to crater, it would have done so already…This week’s survey from the American Association of Individual Investors shows bullish sentiment dropped to 26.7%, its lowest level in more than two years and its 10th decline over the past 12 weeks, Bespoke pointed out…It’s this mistrust in the rally that could be just the thing to get it back on track.” Commentary at…
http://www.marketwatch.com/story/the-screaming-buy-signal-of-gathering-bears-2015-05-15
My cmt: I am bullish too, at least for a few more months.  See Saturday’s Market Report for more on my reasons.
 
EXCERPT - WEEKLY MARKET COMMENTARY (Hussman Funds)
“Our view is simple. The U.S. stock market is in the third valuation bubble of the past 15 years, which is likely to be resolved by losses similar to the outcomes we observed in the first two. In the face of constant cheerleading in 2000 based on theories and valuation measures that were historically unfounded, I wrote in February of that year:
“If you turn off CNBC and think about the market independently for even a few minutes, it is clear that this market displays none of the conditions which have historically been followed by sustained market advances, and all of the conditions which have historically been followed by market crashes. The aphorism ‘Buy low, sell high’ has long been discarded. The replacement ‘Buy high, sell higher’ has also been abandoned. The rallying cries of investors are now just ‘Buy’ and ‘Get me in!’” – John Hussman, Phd…Full commentary at…
http://www.hussmanfunds.com/wmc/wmc150518.htm
OK; but as the prior above article notes, investor sentiment is surprisingly bearish and that should allow (but not guarantee) further advance in the markets.
 
MARKET REPORT
-Monday, the S&P 500 was up about 0.3% to 2129 at the close.
-VIX was up about 3% to 12.73.
-The yield on the 10-year Treasury Note rose to 2.23%.
In addition to the S&P 500, the Nasdaq Composite made a new high today too. That has been the last major index to climb above its prior high in 2000.  If it continues up, this should turn a few more bears into bulls, or at least create some more demand. 2220 doesn’t look impossible on the S&P 500.
         
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 52% at the close Monday.  (A number above 50% is usually GOOD news for the markets. New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +81. (It was +69 Friday.)  The 10-day moving average of change in the spread slipped to +4.  In other words, over the last 10-days, on average; the spread has increased by 4 each day.
 
Internals remained positive on the markets.

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 2014, using these internals alone would have made a 9% return vs. 13% 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, nearly straight-up year like 2014.
 
NTSM         
Monday, the NTSM analysis remained HOLD. PRICE, VOLUME, VIX and SENTIMENT indicators are neutral, although (as always) sentiment remains extremely high.

MY INVESTED STOCK POSITION

I remain fully invested at 50% invested, mostly in smaller cap-stocks in the long-term portfolio with some international stocks. 50% is conservative, but appropriate for a conservative retired guy. 
 
The Dow Jones US Completion Index (all stocks except the S&P 500 – the “S” fund in the TSP) remains ahead of the S&P 500.  Since 1 February it is 2.6% ahead of the S&P 500. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 3.5% ahead of the S&P 500.
 
THRIFT SAVINGS PLAN (TSP) MEMBERS
My TSP Allocation: 50%-G; 10%-C; 25%-S; 15%-I.  (50% cash is too high for non-retirees, however, the “G”-fund did return 2.2% over the last 12-months and that is exceptional for risk-free money.)