Monday, November 30, 2015

Stock Market Crash Warning – John Hussman … Don’t Be Too Aggressive in Stocks … Who Earns Minimum Wage … China’s bear trap … Stock Market Analysis

CRASH WARNING FROM JOHN HUSSMAN (Hussman Funds)
“…with market internals presently negative and credit spreads continuing to widen, the market remains vulnerable to an air-pocket, panic or crash, here and now…our expectation is that the completion of the current market cycle will involve a market loss of at least 40-55%; a loss that would merely take the most historically reliable valuation measures to run-of-the-mill pre-bubble norms, not materially below them…Investors should remember from the 2000-2002 and 2007-2009 collapses that in the absence of investor risk-seeking - as conveyed by market internals - even aggressive Fed easing does not support stocks.” – John Hussman, PhD. Weekly Market Commentary from Hussman Funds at…
http://www.hussmanfunds.com/wmc/wmc151130.htm
 
DON’T BE TOO AGGRESSIVE (CNBC)
"I would tell people not to be too long here, not to be too aggressive on the market," said Glazer [portfolio manager Larry Glazer], whose Boston-based firm manages $2 billion in assets. "…the easy money has been made." – Larry Glazer. Story at…
http://www.cnbc.com/2015/11/30/2016-wont-be-all-you-can-eat-market-fund-manager.html
 
DON’T BE FOOLED BY CHINA BEAR TRAP (CNBC)
I agree. The China bear is not done. Story at…
http://www.cnbc.com/2015/11/30/dont-be-fooled-by-chinas-bear-trap-commentary.html?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=103204019
 
“WHO EARNS MINIMUM WAGE?” (MarketWatch)
FYI: Story at…
http://www.marketwatch.com/story/who-earns-the-minimum-wage-the-facts-2015-11-10
 
MARKET REPORT / ANALYSIS        
-Monday, the S&P 500 was down about 0.5% to 2080 at the close as it closed near the low for the day.
-VIX rose about 7% to 16.13. (The Options Boys must be on vacation.)
-The yield on the 10-year Treasury dipped to 2.22.
 
My $-flow analysis from last Wednesday was flawed. If one wants to track money flow, just divide the change in value of the Index (proxy dollars) by the total volume and you get $ per share. Then multiply that result by the up-volume or down-volume and those are the $-up and $-down.  It is just a volume analysis multiplied by a constant (the Index value). That constant is cancelled out if one calculates a spread between the up and down volume or a ratio; therefore, tracking “volume-only” is just as valid for most purposes of technical analysis. I have been working on new indicators since I finished some reports on technical analysis; some good results and others (like the above) not so good.
 
Breadth (%-of stocks advancing) now is reaching an extreme that may be too good on a 10-day basis.  At the top in 2010, the 10-dMA of %-advancing was 59% and the data is almost there now.  There are other measures of breadth that look toppy too. In part, that’s why I have ignored some my other “standard” signals that have been more positive. Breadth is “overbought” on the tried and true Adv/Dec Ratio analysis method as of Friday and Monday. RSI was overbought at the recent 3 Nov top of 2110.
 
The first few days of a new month are some of the most bullish days on the stock market.  That’s because most investors set their mutual fund purchases early in the month. 
 
I wouldn’t be surprised to see the markets pullback some (perhaps after an up-day tomorrow) given oversold conditions and chart patterns. We’ll see.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 57.5% Monday vs. 56.9% Friday.  (A number above 50% is usually GOOD news for the markets.  On a longer term, the 150-day moving average of advancing stocks dipped to 49.2%. A value below 50% indicates a down trend.
 
The McClellan Oscillator (a Breadth measure) pulled back some, but it remained positive Monday.
 
New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +22. (It was 41 Friday.)   The 10-day moving average of the change in spread was +22 Monday.  In other words, over the last 10-days, on average; the spread has increased by 22 each day.  The 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 long term indicator was BUY. The Price, Volume & VIX indicators are positive.  Sentiment is neutral. I remain skeptical that this is a good time to get in.  My prior blog posts explain the reasoning.


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
All cash: G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 100%
I made a rather impulsive sell decision. For my reasons (or lack of reason) see “My Invested Stock Position” in my prior blog at...
http://navigatethestockmarket.blogspot.com/2015/11/factset-earnings-cass-freight-index.html
There have been enough major top indicators recently to warrant more caution than usual.
 
One needn’t be “all-out” to be well protected if there is a bear market. In fact, I don’t recommend it.  For example: With 30% invested in the stock market, one would only lose 15% of the portfolio if the market were to be cut in half; one would have plenty to invest at the bottom and 30% in stocks hedges the bet if the markets go up.
 
I have been considering increasing stock-investments, but I’d like to see more price movement first.

Wednesday, November 25, 2015

Jobless Claims … Durable Goods Orders … Michigan Sentiment …Stock Market Analysis

JOBLESS CLAIMS (CNBC)
“The number of Americans filing for unemployment benefits fell more than expected last week, drifting back to near 42-year lows as labor market conditions continue to tighten. Initial claims for state unemployment benefits declined 12,000 to a seasonally adjusted 260,000 for the week ended Nov. 21…” Story at….
http://www.cnbc.com/2015/11/25/us-weekly-jobless-claims-nov-14-2015.html
 
DURABLE GOODS (ABC News)
“Orders for long-lasting manufactured goods posted a solid gain in October after two months of weakness, while a key category that tracks business investment plans advanced by the largest amount in three months. Orders for durable goods rose 3 percent in October following declines in both September and August…” Story at…
http://abcnews.go.com/Business/wireStory/orders-us-durable-goods-rise-strong-percent-october-35410517


MICHIGAN SENTIMENT (Econotimes)
“The University of Michigan index of consumer sentiment fell to 91.3 in the final November print, down from 93.1 in the mid-month preliminary estimate.” Story at…
http://www.econotimes.com/University-of-Michigan-consumer-sentiment-revised-down-in-late-November-120932

MARKET REPORT / ANALYSIS        
-Wednesday, the S&P 500 was unchanged at 2089 at the close.
-VIX fell about 5% to 15.19. (The Options Boys must be on vacation.)
-The yield on the 10-year Treasury dipped to 2.23.
 
The S&P 500 was flat, but 61% of stocks were up today.  Oddly, most of the volume was down.  I’ve been looking at an indicator based on $-flow; essentially, “Where are the $ going – mostly up, or mostly down?  The answer is mostly down.  (Down-volume tracks the number of shares traded at a price lower than the prior price. Similarly, declining-issues are stocks purchased/sold at a lower price than the prior price. Up-volume and advancing-issues are just the opposite.) Over the last 150-days, only 48.9% of the dollars traded in the NYSE have been on purchases of stocks going up. The results are similar for shorter time frames too.  Not surprisingly, the S&P 500 is down 0.6% over the same 150-day time period. Down $-flow is just another bearish signal.
 
Volume was lighter today and should be minimal on Friday with a 1PM close at the NYSE.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 52.5% Wednesday vs. 50.7% Tuesday.  (A number above 50% is usually GOOD news for the markets.  On a longer term, the 150-day moving average of advancing stocks rose to 49.2%. A value below 50% indicates a down trend.
 
The McClellan Oscillator (a Breadth measure) remained positive Wednesday.
 
In a positive reversal, New-highs outpaced New-lows Wednesday. The spread (new-highs minus new-lows) was +46. (It was -20 Tuesday.)   The 10-day moving average of the change in spread was +10 Wednesday.  In other words, over the last 10-days, on average; the spread has increased by 10 each day.  The 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         
Wednesday, the NTSM long term indicator was BUY. The Price & VIX indicators are positive.  Sentiment and Volume indicators are neutral. I remain skeptical that this is a good time to get in.  My prior blog posts explain the reasoning.


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
All cash: G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 100%
I made a rather impulsive decision. For my reasons (or lack of reason) see “My Invested Stock Position” in my prior blog at...
http://navigatethestockmarket.blogspot.com/2015/11/factset-earnings-cass-freight-index.html
There have been enough major top indicators recently to warrant more caution than usual.
 
One needn’t be “all-out” to be well protected if there is a bear market. For example: With 30% invested in the stock market, one would only lose 15% of the portfolio if the market were to be cut in half; one would have plenty to invest at the bottom and 30% in stocks hedges the bet if the markets go up.
 
I am considering increasing stock-investments, but I’d like to see more price movement.

Tuesday, November 24, 2015

GDP – 2nd Est … Consumer Confidence … Stock Market Analysis

GDP (Reuters)
“The Commerce Department on Tuesday said the nation's gross domestic product grew at a 2.1 percent annual pace, not the 1.5 percent rate it reported last month, as businesses reduced an inventory bloat less aggressively than previously believed.” Story at…http://www.reuters.com/article/2015/11/24/us-gdp-usa-idUSKBN0TD1M520151124#78L0GM3Ho9IRspbL.97
 
CONSUMER CONFIDENCE (Advisor Perspectives)
“The latest Conference Board Consumer Confidence Index … headline number of 90.4 was a plunge from the October final reading of 99.1, which is an upward revision from 97.6. Today's number was below the Investing.com forecast of 99.5 and the lowest reading in 15 months.” Story at…
http://www.advisorperspectives.com/dshort/updates/Conference-Board-Consumer-Confidence-Index.php
 
MARKET REPORT / ANALYSIS        
-Tuesday, the S&P 500 was up about 0.1% to 2089 at the close.
-VIX rose about 2% to 15.93.
-The yield on the 10-year Treasury dipped to 2.24.
 
The Index is 1.3% above the 200-dMA. Most indicators are positive, but the chart is not giving me much confidence.  I have been researching tops and bottoms so I have a lot more tools for calling bottoms. Exact tops are not easy to call. The S&P 500 is clearly in a topping pattern, but that may ebb and flow for considerable time. When I look back at the higher low in September (the retest of the August low) I see no confirmation for an all-clear signal. There was a volume reversal, that would be an indication for a short term buy, but there was never a lower low. I’ll just have to watch the market for further clues. In the future I think a better tactic would be to play the shorter term moves. 
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 50.7% Tuesday vs. 50.6% Monday.  (A number above 50% is usually GOOD news for the markets.  On a longer term, the 150-day moving average of advancing stocks dipped to 49.1%. A value below 50% indicates a down trend.
 
The McClellan Oscillator (a Breadth measure) remained positive Tuesday.
 
New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus-20. (It was -39 Monday.)   The 10-day moving average of the change in spread was +4 Tuesday.  In other words, over the last 10-days, on average; the spread has increased by 4 each day.  The 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         
Tuesday, the NTSM long term indicator was BUY. The Price & VIX indicators are positive.  Sentiment and Volume indicators are neutral. I remain skeptical that this is a good time to get in.  My prior blog posts explain the reasoning.


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
All cash: G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 100%
I made a rather impulsive decision. For my reasons (or lack of reason) see “My Invested Stock Position” in my prior blog at...
http://navigatethestockmarket.blogspot.com/2015/11/factset-earnings-cass-freight-index.html
There have been enough major top indicators recently to warrant more caution than usual.
 
One needn’t be “all-out” to be well protected if there is a bear market. For example: With 30% invested in the stock market, one would only lose 15% of the portfolio if the market were to be cut in half; one would have plenty to invest at the bottom and 30% in stocks hedges the bet if the markets go up.
 
I am considering increasing stock-investments, but I’d like to see more price movement before the end of the month.