“Oil dropped to the lowest in more than six years as investors discounted a decline in U.S. crude inventories. Crude supplies fell 3.57 million barrels last week, the U.S. Energy Information Administration reported Wednesday.” Story at…
http://www.bloomberg.com/news/articles/2015-12-09/oil-halts-decline-near-six-year-low-before-u-s-stockpile-data
MARKET REPORT / ANALYSIS
-Wednesday, the S&P 500 fell about 0.8% to 2048 at the close.
-VIX rose about 11% to 19.6. (The Options Boys woke up.)
-The yield on the 10-year Treasury dipped to 2.21.
The Advance/Decline ratio is now signaling oversold. RSI is not yet oversold nor is the Smart Money Index. We could see a bounce, but the trend remains down.
The S&P 500 is now 0.8% below its 200-dMA and the slope of the 200-dMA remains DOWN as of Wednesday; the trend is down, whether it will be long-term remains to be seen. The S&P 500 dropped 0.2% below the 50-dMA. That’s another support level under stress.
A 50% down retracement would put the market at about 1990. From the S&P 500 chart it looks like an important level is around 1930-1980. Those levels will be watched for a possible buy signal. A retest of the 25 Aug low is still possible.
I have 2 indicators that have been very reliable recently, one based on breadth (but not the overbought/oversold ratio) and one based on smart-money; both are still suggesting further downside ahead.
There was some late day buying Wednesday afternoon, but earlier the major indices failed to hold their gains and that’s a bearish sign; still, a bounce would not be a surprise due to an oversold reading on the A/D ratio.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 42.1% Wednesday vs. 44.1% Tuesday. (A number below 50% is usually BAD news for the markets. On a longer term, the 150-day moving average of advancing stocks slipped to 49.0%. A value below 50% indicates a down trend.
The McClellan Oscillator (a Breadth measure) remained negative Wednesday and has been dropping for more than a week.
New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus-129. (It was -304 Tuesday.) The 10-day moving average of the change in spread was -11 Wednesday. In other words, over the last 10-days, on average; the spread has decreased by 11 each day.
NTSM
Wednesday, the NTSM long term indicator was HOLD. The Price indicator is positive. Sentiment, VIX & Volume are neutral. I remain skeptical that this is a good time to get in. My prior blog posts explain the reasoning. The market needs to break out higher before I will be convinced.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONAll 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.
