“For Q4 2015, the blended earnings decline is -6.0%. If
the index reports a decline in
earnings for Q4, it will mark the first time the index
has seen three consecutive quarters of year-overyear declines in earnings since
Q1 2009 through Q3 2009.” Excerpted from Factset Earnings Insight available at…
My cmt: Obviously this is a problem for stocks.
CONSUMER CONFIDENCE (CNBC)
“A key measure of consumers' attitudes was better than
expected this month. The Consumer Confidence index hit 98.1 in January, up from
a revised 96.3 in December 2015…” Story at…
WHO CARES ABOUT THE DEFICIT (MarketWatch)
“A declining number of Americans — roughly 56%, compared
with 64% last year — think that reducing the budget deficit should be a top
priority for the president and Congress this year…” Story at…
How ironic. The economy was the number one issue, but the
Government has very little control over the business cycle and therefore can do
little about the economy.
EXTREME LOSSES (Hussman Funds)
“…the market return/risk classification we identify here
could not be more hostile. In particular, relief rallies under current
conditions tend to be truncated by fresh losses…On the economic front, I
continue to believe that a U.S. recession is not only a risk, but is now the
most probable outcome.” – John Hussman, PhD. Weekly Market Commentary from
Hussman Funds at…
MARKET REPORT / ANALYSIS
-Tuesday, the S&P 500 was up about 1.4% to 1904 at
the close.
-VIX fell about 7% to 22.50.
-The yield on the 10-year Treasury dipped to 1.99%
Apple reported earning that exceeded expectations, but missed on revenues. It
will be interesting to see if this affects market trend Wednesday.
“As an investor, you should remember that making money in
the market is only one-half of the job. Keeping it is the other.” – Lance
Roberts
I am tentatively guessing around 1950 as a top for this
rally, but I’ll be watching my Money Trend Indicator because the markets will
do what they want.
RSI and the Overbought
/Oversold Ratio are no longer oversold.
We’ll need to re-test the 1859 low. If past history holds, that would occur in 1
to 7-weeks after about a 5% retracement upward. (Those are wide-ranging numbers
from looking at 4 corrections with steep declines.)
MONEY TREND & TRADING
My Money Trend indicator is trending upward. It has been
a pretty good indicator recently. I
still need to do some back testing to confirm its reliability. I have been too busy to short-term trade the
market recently. If I am holding a 2x position (for example QLD or QID) I watch
the charts closely. Alternatively, one could set close stops. The trend is now
down, and has been for some time. The 200-dMA is falling, so going long now is
the same as shorting the market a few years ago. Many traders lost money betting against the
trend and FED.
MARKET INTERNALS (NYSE DATA)
(I am getting data from various sites. Some of the
numbers are subject to minor revision so the previous day’s numbers may be
slightly different than reported yesterday.)
The 10-day moving average of the percentage of stocks
advancing (NYSE) jumped up to 45.8% Tuesday vs. 41% Monday. (A number below 50% is usually BAD news for
the markets. On a longer term, the 150-day moving average of advancing stocks
rose to 48.3%. A value below 50% indicates a down trend. The McClellan
Oscillator (a Breadth measure) improved to positive, reflecting the recent
improvements in the percentage of stocks advancing.
New-lows outpaced New-highs again. The spread (new-highs
minus new-lows) was minus-54. (It was -86 Monday.) The 10-day moving average of the change in
spread was +54 Tuesday. In other words,
over the last 10-days, on average; the spread has INCREASED by 54 each day.
Market Internals remained neutral 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 VIX indicator was negative. The Volume, Price
& Sentiment indicators were neutral. The long-term NTSM indicator is HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 30 Dec I reduced my invested position in my retirement
account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in
the TSP). Friday, 15 Jan I reduced stock allocation to zero in long-term
accounts. That leaves 100% invested in cash yielding about 2%. Short-term bonds would be OK too.
The S&P 500 peaked in Mid-May and has not been able
to break higher in the past 8-months. That looks like a top to me. See “Why the
Bull Market May be Dead” in my 14 December blog at…http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html
