MARKET REPORT / ANALYSIS
- Friday, the S&P 500 finished up 0.6% to 2052 at the close.
-VIX dropped about 7% to 15.22.
-The yield on the 10-year Treasury remained 1.85%.
Friday saw low volume on the NYSE that was about 10% below the monthly average. This suggests that many remained un-convinced that Friday was a good time to buy.
The S&P 500 has now failed to make new highs in a year. That’s a bearish indicator, but I must note that when compared to 2007 (another instance where this occurred) the comparison is not 1 to 1. In 2007 the markets were much lower after stagnating for such a long time. One wonders whether this time will be different. Could we avoid the bear? I doubt it, but it doesn’t seem imminent. Still, new-high new-low data is weakening. On the whole, indicators remain mostly bearish Friday, but they did improve marginally.
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator is still moving up, Friday, and that’s a bullish signal. I continue to hold short positions mostly in SH and some in QID. Those will have to go if the market reverses upward and exceeds my pain-target of 2110 on the S&P 500; I may sell these positions sooner if the market indicators trend upward.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) improved to 49.7% Friday. It was 48.1% Thursday. A number below 50% is usually BAD news for the markets.
On a longer term, the 150-day moving average of advancing stocks remained 51.4%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) improved, but remained negative – a neutral indicator in the short-term.
In a positive reversal, New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +24 Friday. (It was -14 Thursday).
The 10-day moving average of the change in spread was minus-11. In other words, over the last 10-days, on average; the spread has decreased by 11 each day. Market Internals remained neutral, but only because up-volume is slightly outpacing down volume on a smoothed 10-day basis. Overall, Market Internals remained neutral on the markets.
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) and on 15 Jan I reduced stock allocation to zero in long-term accounts. If the S&P 500 index closes above 2110, I plan to add to my stock allocation.
The S&P 500 peaked in Mid-May and has not been able to break higher in the past 12-months. That looks like a top to me. See “Why the Bull Market May be Dead” in my 14 December blog at…