“First-quarter GDP growth saw a revision, and it raised to 0.8% from the prior 0.5%. This report was incredibly slow, and it was also under the expectations.” Story at… http://247wallst.com/economy/2016/05/27/q1-gdp-revision-higher-yet-disappointing/
YELLEN SPEECH (MarketWatch)
MICHIGAN SENTIMENT (Bloomberg)
Consumer confidence in the U.S. climbed to an almost one-year high in May as Americans grew the most upbeat about incomes after inflation than at any time in a decade, the University of Michigan’s report showed on Friday.” Story at…
MARKET REPORT / ANALYSIS
- Friday, the S&P 500 was up 0.4% 2099.
-VIX dropped about 2% to 13.17 near the close.
-The yield on the 10-year Treasury rose to 1.85%.
We saw low volume today (about 20% below the monthly average) due to the 3-day Holiday.
I’ve mentioned that investors are skeptical of the rally due to lower than normal volume prior to today. Here’s further evidence of a bearish sentiment trend. My sentiment indicator (%-bulls in Rydex bull/bear funds) has fallen from 76%-bulls to just 60%-bulls in just 3-weeks. The S&P 500 is up 2% over that period, but bullish sentiment is falling. It is still very high, with 6 out of 10 investors bullish, but the trend is down.
The 5-10-20 Timer issued a BUY signal yesterday. That is a simple system based on the 5-dEMA and the 10-dEMA higher than the 20-dEMA. When combined with my market Internals (that are also bullish), I would normally issue a BUY signal now. Given the low volume day, I am inclined to wait for a more believable signal, perhaps early next week. The S&P 500 has moved slightly higher than my sell point last December, so if bullish conditions remain next week, I’ll get back in. Previously I set 2010 as a re-entry point and that's where it may wind up.
There was one important negative signal today; the S&P 500 is overbought using the old tried and true Overbought/Oversold Ratio (based on advance decline data). Next week is also bearish for the markets in general with most years down (based on a piece I read somewhere).
Indicators are mostly bullish and trending generally higher, the new-high, new-low data reversed higher so my signals are getting more bullish.
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator remains in an uptrend, Friday, and that’s clearly a bullish signal. In spite of that, I continue to hold short positions mostly in SH and some in QID. Those will have to go if the market exceeds my pain-target of 2110 on the S&P 500.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 56.8% Friday. It was 53.5% Thursday. A number above 50% is usually GOOD news for the markets.
On a longer term, the 150-day moving average of advancing stocks remained 51.7%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) improved and remained positive – a bullish indicator in the short-term.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +76 Friday. (It was +74 Thursday).
The 10-day moving average of the change in spread remained minus-2. In other words, over the last 10-days, on average; the spread has decreased by 2 each day. Market Internals switched to bullish.
Friday, the Volume, VIX & Sentiment indicators were all neutral. The Price indicator (measuring the size of up vs down moves) was positive. The long-term NTSM indicator remains HOLD.
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 2015 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…