The Stock Market wants to go up…

The Navigate the Stock Market analysis remains a Buy today.  I went 100% long in stocks today.  I went 50% into stocks on the 20 April Buy signal, but I waited to be sure the S&P was going to get above the 1343 area before committing more money to stocks.  1343 on the S&P was where the correction (recent unpleasantness?) started.

Putting 100% into stocks is way too high for most people and I don’t recommend it unless you have a high risk tolerance.  The usual recommendation for exposure to stocks in a portfolio is to subtract your age from 100. The result is the amount you should invest in stocks.  The remainder could be split between bonds, cash, real estate, and these days, commodities.   (Most people get exposure to real estate thru their home, but Real estate investment trusts (REITS) or a real estate mutual fund can be a good addition.  Don’t expect fast growth, but they are good dividend payers.  Price wise, real estate is pretty much at the bottom)

 I probably won’t post again until Monday, or maybe Sunday night. 

 NTMS switched to BUY on 20 April and I currently am 100% invested in the stock market. 

The Wednesday Update of the Navigate the Stock Market System

The S&P 500 moved above 1350 today so I think we buried the correction-coffin.  Yesterday we were still putting nails in it.  The NTMS analysis is pretty positive at today’s close.  We must conclude that the generally positive earnings results  (after Alcoa’s poor one) have put investors in the mood to buy.

The Investment Company Institute reported today that $1.9-billion flowed into US equity mutual funds for the week ending 20 April (the most recent data available).  Prior to Jan of this year, funds have been flowing out of US equity mutual funds going back several years so this is “new” money and may be what it takes to drive the market higher. 

SUMMARY OF NTSM INDICATORS:

As of today’s close, our 4-areas of market analysis present the following picture:

SENTIMENT:  Neutral.  %-bulls indicator was 47% as of yesterday’s close. 

PRICE: Buy.  The Price analysis indicator remains firmly in Buy territory.  It has been a Buy all but 2-days since 11 April.

VOLUME: Buy.  Volume has been more on the up-side recently so this indicator switched to Buy today.

VIX:  Buy.  Our VIX indicator turned to a Buy again today.

I’ll summarize yesterday’s blog in one sentence, “If the VIX can’t get below 15 we’ll see another correction.”  VIX dropped today and that’s good. We’ll just have to watch and see what happens in the vicinity of 15, but mostly, I’ll watch the VIX indicator in the NTSM analysis.   

SUMMARY: The overall Navigate the Stock Market analysis is BUY today. (See the page How to Use the NTSM System).

NTMS switched to BUY on 20 April and I upped my stock investments from 30% to 50% as a result.  I will go 100% long in stocks tomorrow.

Can VIX predict the future of this market?

VIX is the ticker symbol for Chicago Board Options Exchange (CBOE) Volatility Index.  VIX is a mathematical equation calculated from call and put options (buy and sell options respectively).    

Today’s VIX is around 15.  A VIX of 15 means that the options market is implying that there is an expected annualized 15% change in S&P 500 value (up or down) over the next 30-days.  Stated more exactly, and on a non-annualized basis, there is 67% likelihood that the change in S&P 500 will be less than 4.3% over the next 30-days.  (Yes, VIX was invented by a Professor.)

The NTSM analysis uses a reasonably sophisticated way of analyzing VIX and relies on the so called first and second derivative of VIX, or simply, the rate of change of VIX and the change in direction of VIX.  We generally don’t spend too much time looking at the absolute value of VIX. 

Now might be a time to reconsider that philosophy. 

VIX dropped to the vicinity of 15 once in 2010 and a few times in 2011.  In 2010 when VIX couldn’t get below 15 we experienced a 15% correction.  In 2011, the VIX bounced in the vicinity of 15 three times before the 22 Feb start of the rough spot (correction?) we are now trying to put behind us.

The only 2011 drop of VIX below 15, on 21 April, coincided with nearly a 2% gain in the S&P that occurred over April 20^th and 21^st. 

So it looks like we need to get a VIX reading consistently below 15 if we are to go much higher on the S&P.  That didn’t happen all through 2010 or 2011, but it is certainly possible for the VIX to go lower.  VIX bottomed below 10 late in 2006 preceding the peak in the S&P 500 in mid-2007 by about 6-months.  

Bottom line: if VIX gets below 15 and continues falling, we should see the S&P continue its upward trend; if not, we are at, or very near, the Top and I think we will see another correction.  There is a volatility index for other Indices as well so be sure to follow the correct one - S&P VIX.

Today’s move was encouraging and it appears to me that the nail is in the coffin for the correction; we can declare it over!  Those sorts of pronouncements usually aren’t smart, but let’s go for the drama today (if the market falls off a cliff tomorrow I’ll just call it a new correction).  This prognostication assumes the VIX confirms our thinking!   

Conversely, today was a statistically significant day (it exceeded our statistical parameters of price and volume) and we could see some down-days near-term.  Even so, I doubt that we will get below 1305 in the near term and the damage should be confined to less than 5% if it occurs at all.   Actually, I expect others will be encouraged by today’s action and we should see the S&P moving up on higher volume.  Then we will be even more convinced the correction is over.

NTSM switched to BUY on 20 April. NTSM analysis is a HOLD today, but indicators improved.  I remain 50% invested in stocks, but I will move to 100% invested in stocks sometime this week, hopefully, buying on weakness.  This all assumes NTSM doesn’t change its mind and switch to Sell.

Cautiously optimistic on stocks

  

The NTSM system dropped to Neutral (Hold) on the slight down-day today, mostly because the VIX indicator came down some to neutral.  Other indicators went up so it was a mixed bag.  It is not unusual for the NTSM analysis to drop to a neutral after a Buy recommendation so we shouldn’t read anything too negative into today’s market.

We started this period of confused market action on 22 Feb with the S&P 500 about 15% above its 200-day moving average. As of today’s close, we are 10% above the 200-dMA so this sideways market-action has helped clear the air some. 

I continue to worry that we’re not getting away from the 1330-1350 area and that puts us at risk for another retreat. With that in mind, and the Buy signal we had on 20 April, I remain 50% invested in stocks.  

Nice to see some follow thru in the Stock Market today

Now we have to wait and see if the S&P 500 can get past the 18 February level of 1343.  At present we are optimistic since the Navigate the Stock Market analysis turned to BUY yesterday and remains BUY today.

After the S&P 500 made a low of 1257 on 16 March, I kept expecting a retest of that low.  It hasn’t happened yet.  It could still occur, of course, but that is less likely now. 

The NTSM system gave a SELL at 1315 on 22 February.  Since our system is based on closing numbers, the next day’s close was 1307 and that is our base point for calculating gains and losses.  Likewise our Buy point was 1337.  That means that the cost of being out of the market was 2.2%.  Frankly, since I was 100% in the market before the Sell signal and I had the benefit of a huge run-up from the previous 2 July low of 1022, I can’t complain.  In fact, I had a great deal of peace of mind being out of the market during the recent turmoil.  As Ralph Waldo Emerson said, “Nothing can bring you peace but yourself.”  I think he meant to get out of the stock market and cut your risk when the serpents creep into the porridge. Well…perhaps not, but I do know one thing, had this been the start of a bear market, followers of NTSM would have been very happy.

One curious point: if the NTSM Sentiment indicator had been 0.1% higher on 17 Feb, NTSM would have gotten us out of the market at the Top and we would have made about ½% gain.  There’s an element of luck to this game!

NTMS switched to BUY on 20 April.  The NTSM remains BUY today.

The Wednesday Update of the Navigate the Stock Market System

I posted this morning that a close above 1322 would produce a BUY in the Navigate the Stock Market (NTSM) system; tonight we have a BUY.

One of the posters over on the Investor Village website goes by the handle of “Old Fool” (Mr. McCranie, I believe.) I picked up my favorite investing phrase from him: “Trade what you see, not what you think.”  Nothing could be more apropos today.  I think there are so many issues it’s hard to buy stocks at this point.  On the other hand, I see the NTSM system turning positive so the odds for more upward movement are reasonably high.

 We are 17% from the previous high (1550 on the S&P 500) and only a little below the recent high of 1342.  I am very leery that we may not be able to get significantly above the 1343 level.  So….I will only switch to 50% invested in stocks.  I’ll wait longer to see if this dog has legs…or fleas.   It is possible that we could have a quick turn-around and call a Sell sooner than we’d like – so stay tuned. 

SUMMARY OF NTSM INDICATORS:

As of today’s close, our 4-areas of market analysis present the following picture:

SENTIMENT:  Neutral.  %-bulls indicator was 49% as of yesterday’s close.  This is normal in a downturn for the sentiment to reach high levels and then quickly switch as investor run to short the market as it falls.  It is unusual for the Sentiment to get to extreme levels (we were >65% for 5-days last week – that’s extreme) and not see a significant downturn in the market. 

PRICE: Buy.  The Price analysis indicator has been moved up and is now firmly in Buy territory.  It has been a Buy all but 2-days since 11 April.

VOLUME: Neutral.  Volume has been meandering around with little direction. Volume is Hold.  But with an up-day or two it could easily turn green too.

VIX:  Buy.  Our VIX indicator turned to a Buy yesterday and is even stronger today. 

SUMMARY: The overall Navigate the Stock Market analysis is BUY today. (See the page How to Use the NTSM System).

NTMS switched to SELL on 22 February.  Today’s change to BUY represents the 1^st change in position since 22 February and I will be upping my stock investments from 30% t0 50% tomorrow and closing short positions.

Wait a little unitl we get more clarity...

I will wait at least until tommorrow before acting on this change to BUY since it is possible that today will be a top.  We could see a reversal tommorrow, so it may be worthwhile to be cautious today.

NTSM Switching to BUY

Quck post...It looks like a close above 1321 today will trigger a Buy signal.  VIX has drastically improved over the past 2-days and that is pushing the change in status.  I'll post more tonight.

No change in our Stock Market Position

Staying Defensive

Navigate the Stock Market (NTSM) switched to SELL on 22 February at S&P 500 = 1315.  Since then, NTSM analysis has been Sell or Hold (it remained Hold today); therefore, I am still conservatively positioned with only 30% invested in stocks.  I am 2xshort with 50% of my trading portfolio using QID and the Inverse Rydex 2xNazdaq fund.

Stock Market - Still looks like we’ll retest the recent low of S&P 1257

The big news today was that S&P cut its long term outlook on US debt to negative.  That’s the first shoe, but it is far short from an outright downgrade of the U.S. AAA bond rating. 

It is easy to understand the S&P position though.  If the Democrats won’t cut spending and the Republicans won’t increase taxes, the United States of America faces nothing short of destruction.   The recent 1% cut of the Federal budget was claimed as a success by both sides.  In fact, it is nothing more than a token for an embarrassingly stupid part of the electorate.

As you may recall we suggested that a breakdown might come soon.  We had it today and I expect more down-days to follow.  There is good news though; today’s price and volume move continues a trend of reduced magnitude of price and volume on down days, so we still are guessing that this correction will not be the big one that would take us back to the previous low 2-years ago.  Since the Navigate the Stock Market (NTSM) system doesn’t give a definitive read on how big a correction we will have, I have a very defensive stance regarding the stock market.

NTMS switched to SELL on 22 February at S&P 500 = 1315.  Since then, NTMS analysis has been Sell or Hold (it remained Hold today); therefore, I am still conservatively positioned with only 30% invested in stocks.  I am 2xshort with 50% of my trading portfolio using QID and the Inverse Rydex 2xNazdaq fund.

No change in the Navigate the Stock Market analysis

Initial Jobless Claims rose to 412,000, the market expected 385,000. Consumer prices had their biggest jump since the summer of 2009; they rose 0.5%. Core CPI (x-energy and food) was OK. I paid $3.799 for a gallon of gas today. Ouch!  Inexplicably, consumer confidence rose. The S&P 500 was up 0.4%.  Given the news, I’d say that was pretty good.

NTMS switched to SELL on 22 February at S&P 500 = 1315.  Since then, NTMS analysis has been Sell or Hold (it remained Hold today); therefore, I am still conservatively positioned with only 30% invested in stocks.  I am 2xshort with 50% of my trading portfolio using QID and the Inverse Rydex 2xNazdaq fund.

How low will this correction go?

I commented yesterday that the NTSM analysis can’t tell how low a correction may go.  That is true at the beginning of a correction, but at this point we can make a guess.  I must caution that this really is speculative – volumes have not been acting normally.  For example, as the S&P accelerated toward the 22 Feb 1343 top, volumes were declining.  That's odd; but let’s speculate anyway.

So far volumes have been declining during this downturn.  As long as that continues, the correction should be relatively shallow.  Optimistically, we could test S&P 500 1257 and then move up.  We are now 8% above the 200-day moving average so a slightly more negative scenario has us falling another 8% from here (down to 1210).  If volumes pick up during any further decline, all bets are off.

There is always some chance that this is THE TOP and we'll see significant declines from here.  There are many non-technical issues of concern such as: End of QE2; high gas prices; Budget Deficit and inflation fears...domestic and foreign.  The problem with these issues is that we have no crystal ball and we can’t know how the Market will interpret them.  The Market always climbs a “wall-of-worry”.  When will the worry turn to panic?   We can’t know.

 NTMS switched to SELL on 22 February.  Since then, NTMS analysis has been Sell or Hold (it remained Hold today); therefore, I am still conservatively positioned with only 30% invested in stocks.  I am 2xshort with 50% of my trading portfolio using QID and the Inverse Rydex 2xNazdaq fund.

The Wednesday Update of the Navigate the Stock Market System

SUMMARY OF NTSM INDICATORS:

As of today’s close, our 4-areas of market analysis present the following picture:

SENTIMENT:  Neutral.  %-bulls indicator fell slightly to 65% as of tonight.  Still this is a very high sentiment value.  As I have commented before, when 2 out of every 3-people think it is time to buy, it is really time to sell.  The sentiment indicator remained above 65% for 5-straight days.  

The last 2-times sentiment hit 66% we had pullbacks of 8% and 15% in 2010.  The 2-times before that resulted in 6% pullbacks in 2009.  (2009 was an odd year though because after the deep correction in 2008, if you were overly bullish, you were right.)

{Just a reminder:  When the Navigate the Stock Market (NTSM) analysis gives a sell indication (predicting a correction as it did on 22 February), we have no idea how deep the correction may be.  Early on, I guessed that the correction might be small, in the 10% range.  That was a guess partly based on the fact that our Sentiment indicator was not particularly elevated.  At this point, sentiment has joined the party with a Sell indication.  That doesn’t mean that we expect a “whopper” correction to use Dr. Hussman’s word (see yesterday’s Blog).  I think there are so many unknowns at this point (oil price; the economy is slowing; housing is still a mess and by some measures getting worse; budget deficits; end of QE2; pick your poison.) that we don’t know if this is THE TOP or not.  It may be, as Sam Stoval, chief investment strategist for Standard & Poor's Equity Research Services,) said a 7-11 correction (7 to 11% down). It isn't as clear as 2007 when we made the old highs and banks were failing.}

PRICE: Buy.  The Price analysis indicator has moved up and is now firmly in Buy territory.  The up moves have been picking up steam.

VOLUME: Neutral.  Volume has been meandering around with little direction. Volume is Hold.

VIX:  Neutral.  Our VIX indicator is Hold.  VIX isn’t giving us much indication which way the market will break. 

SUMMARY: The overall Navigate the Stock Market analysis is NEUTRAL today. (See the page How to Use the NTSM System).

NTMS switched to SELL on 22 February.  Since then, NTMS analysis has been Sell or Hold (it remained Hold today); therefore, I am still conservatively positioned with only 30% invested in stocks.  I went 2xshort with 50% of my trading portfolio using QID and Inverse Rydex 2xNazdaq fund yesterday.

The function of the short position is to hedge the portfolio somewhat.  If the market declines, as we expect, the short position will help make up for losses in the long-term portfolio. 

Sentiment predicts a stock market correction...

“Though the market has not recovered to its February highs here, the measures that define the "overvalued, overbought, overbullish, rising yields" syndrome are actually worse now, on balance. While there remains a possibility that we can clear some component of this syndrome without also observing a strong deterioration in broader market internals...conditions are so extended here that there is now only a narrow "window" between a market decline that would be sufficient to clear the overbought or overbullish components of the present hostile syndrome, and a market decline that would signal a larger and more robust shift toward investor risk aversion. Put simply, a market decline that clears this syndrome could be a whopper.” - John P. Hussman, Ph.D.,11 April 2011 Weekly Market Comment, http://www.hussmanfunds.com, used with permission.

To clarify an important point, Dr. Hussman makes no prediction that the market decline is upon us now.  He suggests that there is instability and we don’t know when the next shoe (bricks in his analogy) will fall.  (See his commentary this week for a fascinating discussion of the market and especially Federal Reserve issues.)

I don’t know if the whopper correction is here either, but our NTSM model told us to leave the market 22 February.  Until the NTSM analysis improves, I will stay extremely defensive. 

The NTMS Sentiment indicator is 67% today and for the fifth straight day it is a SELL (greater than 65% bulls).  The indicator is calculated from a 5-day moving average of Rydex 2x funds (leveraged mutual funds that are long or short the market).  I have records for this indicator going back to July of 2006; I have never seen this much sustained Bullishness…period.  Too much bullish sentiment is a counter indicator and actually is negative for market expectations, i.e., a correction is likely, though not guranteed.

NTMS switched to SELL on 22 February.  Since then, NTMS analysis has been Sell or Hold (it remained Hold today); therefore, I am still conservatively positioned with only 30% invested in stocks.  In order to further hedge my position, I went 2xshort with 50% of my trading portfolio using QID and Inv Rydex 2xNazdaq fund today. (My trading portfolio is roughly 10-15% of the long term portfolio.)

Fed Policy...there are many Finance Professionals who are very concerned

Diverging Monetary Policies, Again
“So, here we are again. Fed policy has once again proved instrumental in inciting a commanding speculative Bubble throughout global risk markets….This is a dangerous period. Global liquidity is way too plentiful, while speculation has become too all-embracing and rewarding. Indications of monetary excess are everywhere. Indeed, we’re in the midst of the biggest financial Bubble in history (the “Global Government Finance Bubble”) – yet everyone seems comfortably oblivious….

Let the world adjust; just ensure that the Fed keeps doing what it's doing. And I just scratch my head in disbelief at how little we’ve allowed ourselves to learn over a turbulent 20 year period of interplay between “activist” policymaking and serial market Bubbles.  

After doubling mortgage Credit in seven years, our system is now on track to double federal debt in 4 years. And the markets couldn’t be more pleased with it all. It leaves one pondering what type of circumstance will be necessary to finally force us to start getting our house in order – to return to some semblance of disciplined central banking and fiscal responsibility.” - Doug Noland, Prudentbear.com, http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10521 (Doug Noland is the Senior Portfolio Manager of the Federated Prudent Bear Fund and Federated Prudent Global Income Fund)

For the past three days the S&P 500 has been trending down at a slope that is typical of previous corrections.  That may indicate another break down this week, but I have no data on which to base that guess.  I have been suggesting since the NTMS turned negative on 22 February that I believed the most likely direction of the market in the near term is down.  I still think we are headed down.  Normally, I use “statistically significant” days (large moves that meet a statistical test for both price and volume) to help identify the trend.  As I commented a while back we have not had a statistically significant day since 16 March.  That alone can be an indicator of trouble ahead. (see my blog post of 4 April)

I must say that the market action has been very unusual from my experience.  There is little market direction probably, because we have seen very low volumes for some time.  It is always possible that we will continue to trend sideways without a down turn, but I don’t think that is as likely as a drop.   

NTMS switched to SELL on 22 February.  Since then, NTMS analysis has been Sell or Hold (it remained Hold today); therefore, I am still conservatively positioned with only 30% invested in stocks.

Still waiting for some direction in the stock market…

The political hysteria over the potential shutdown of Government was fodder for the news media today and the major networks just couldn’t get enough.  Sadly, lost in all the shuffle is a simple truth; the proposed budget is 3.69 trillion dollars.  A budget cut of 100 billion is less that 3% of the total budget.  Republicans claimed 100-billion would make a positive difference in the debt. Democrats said it would ruin the economy. Both are lying – such a small cut would have virtually no impact (good or bad).  The compromise number is about 1% of the budget – a meaningless pittance.

Sentiment was 69%-Bulls at the close today and the 5-day moving average was 67%-Bulls.  These are both high numbers and, as I noted yesterday, have almost always resulted in a pullback of at least 6%.  A 6% pullback would put us back around the recent S&P 500 low 1257.  If we do revisit the prior low, we should be able to tell if we are going to bounce up or drop further by analyzing market internals.

To list just a few issues troubling investors: there has been a lot of talk that we are reaching oil price levels that will cause problems for the economy;  QE2 is ending this summer (by artificially keeping interest rates low the Fed has forced people into the stock market); Ford will idle plants in Belgium for 5-days due to parts shortages associated with the earthquakes; Toyota will temporarily shut down all of its North American factories because of similar parts shortages (more impacts to show later?); political unrest continues in the Middle East; and one more, as noted above, the National Debt is not being addressed.   

From a technical standpoint Sentiment is too Bullish; the S&P is 10.5% above its 200-day moving average; the VIX is still higher than it was before the high of 1243; leadership is failing (since 16 Feb, Nasdaq 100 is trailing the S&P 500 as is Apple )…well you get the idea.

In spite of all the negatives the S&P has been holding around the 1333 mark.  I am doubtful that will last.  I still feel that we will at least retest the recent low of 1257 and may go below that level.  As always…we’ll have to wait and see.

NTMS switched to SELL on 22 February.  Since then, NTMS analysis has been Sell or Hold (it’s Hold today); therefore, I am still conservatively positioned with only 30% invested in stocks.

Double Top?

“The psychology behind a double top is that it wipes out the shorts and pulls everyone into the market. It is usually on declining volume which we have had. I think there is a fair chance here that we see a decent pullback. However, it could also reverse course and breakout to the upside. I just think we are overdue for a more significant pullback and this ugly topping pattern is classic. Every day looks like a reversal break out wiping out more shorts and pulling more longs in. I can't imagine there are many people left who are heavily short this market. Oh, and we are almost at the 2 year anniversary of this bull!” – dmorse (ClearStation poster today)

Not much change today in the NTSM analysis.  Still HOLD.

NTMS switched to Sell on 22 February.  Since then, NTMS analysis has been Sell or Hold; therefore, I am still conservatively positioned with only 30% invested in stocks.

The Wednesday Update of the Navigate the Stock Market System

The Investment Company Institute reported yesterday that Long term US mutual funds experienced $375-million in inflows for the week ending   23 March so Mom & Pop investor (whoever they are) are starting to come back…again. 

The ICI data is good news.  Here’s some from the other side.  CNNMoney reported, “Of the 16 economists surveyed by CNNMoney, all but two have reduced their first quarter economic growth predictions within the last month. Eleven have cut their expectations for the entire year.”  Predictions were for a growth rate of 3.3% in the first three months of this year. But now, those predictions are only 2.7%.  Robert Reich economist and former Labor Secretary in the Clinton Administration wrote on his blog recently, “Why aren't Americans being told the truth about the economy? We're heading in the direction of a double dip -- but you'd never know it if you listened to the upbeat messages coming out of Wall Street and Washington.”

Be vigilant….

SUMMARY OF NTSM INDICATORS:

As of today’s close, our 4-areas of market analysis present the following picture:

SENTIMENT:  Sell.  %-bulls indicator is 66% as of tonight.  As I said yesterday, when 2 out of every 3-people think it is time to buy, it is really time to sell.  The last 2-times sentiment hit 66% we had pullbacks of 8% and 15% in 2010.  The 2-times before that resulted in 6% pullbacks in 2009. 

PRICE: Neutral.  The Price analysis indicator has been meandering around is now firmly in neutral territory.  The up moves just haven’t been very big.

VOLUME: Buy.  More volume has been going to the upside..

VIX:  Neutral.  Our VIX indicator is Hold. 

SUMMARY: The overall Navigate the Stock Market analysis is NEUTRAL today, and that makes 13-days with HOLD as our overall outcome.  (See the page How to Use the NTSM System).

The NTMS analysis gave its first SELL signal of this cycle on 22 Feb 2011at S&P 1315.
As a result of that SELL signal, I am still conservatively positioned with only 30% invested in stocks.

Dittos for the week

No significant change in our recommendation.  Volume has been trending higher on down-moves more than up-moves over the past 5-days, and that is usually not good.  On the other hand, volume has been so low that the indicator hasn’t moved much.  Volume is the only indicator currently recommending a Buy so we can’t complain about that. 

The only significant change has been the sentiment indicator.  It has moved up from under 50%-bulls last week to 65%-bulls, a whisker away from a sell recommendation tonight (66%).  When 2 out of every 3-people think it is time to buy, it is really time to sell.

We could still have a Buy signal if we get a big up-move.  That might bring in more bullish sentiment and send us back to Hold or Sell.  In any event, the Navigate the Stock Market System needs more than 1-indicator to agree before we will have a firm recommendation either Buy or Sell.

The bottom line is that the market remains unsettled without any firm direction.

From today’s data, it appears we may have trouble breaking the previous high of 1343 on 18 Feb.  So far, we haven’t broken 1333 in 2-tries.  We may yet retest the 16 March low of 1256.

As always, we’ll have to wait and see. 

The Navigate the Stock Market analysis is HOLD. 

I am still conservatively positioned with only 30% invested in stocks.

Hmmm…still not a Buy yet

I track statistically significant moves in the S&P 500.  Those are moves that exceed 2/3 of all moves over a given period in size and volume. In other words, they are the bigger moves up or down.  We expect to have a statistically significant move every 3-days or so.  For example from 16 Feb until 16 Mar there were 6-statistically significant moves over 20-days. 

Now here is an odd fact.  Since 16 March, there have been no statistically significant days.  That is a 13-day period.  This sort of market action (smaller moves in price and volume) tends to happen at the highs.  Does this portend further down moves ahead?  Perhaps, but I really don’t know.  I think one reason for the lack of volatility is that even the professional traders are confused by this market.   

I have been trying to convince myself to Buy even though the NTSM analysis has not yet called a Buy.  I haven’t been able to do it.  Fundamentally, I think the market is due to head up, but since there seems to be a lot of doubt, I will wait for some clarification.

The Navigate the Stock Market analysis is still HOLD and shows little change from yesterday. 

 I am still conservatively positioned with only 30% invested in stocks.

Time to Buy…a little…maybe

The Navigate the Stock Market analysis is still HOLD and shows little change from yesterday. 

The S&P 500 had a nice rally on the employment news and then faded in the afternoon.  I never like to see a late fade because it shows a lack of conviction. 

 

Today’s volumes improved, but really, light volume is normal AFTER a bottom because a lot of investors don’t believe the bottom is in and tend to stay on the sidelines in the early stages of a rally.  At this point the S&P has stayed above its trend line convincingly and is now 1.5% above the trend line.  Should we wait until it gets to 3% above trend as classical technical analysis would say?  That would be about 1350. I don’t want to wait that long.  I think the down trend has switched to up; but that is in large part a guess because there have been no statistically significant market days since the recent low of 1257 on 16 March.  I use statistics to verify trends. 

There is one very troubling indicator.  Sentiment is getting overly bullish.   Yesterday % Bulls hit 71% for the day and the 5-day average is 59% at the close today.  If that trend continues, we could see a Sell signal in a few weeks.    

As far as the fundamentals, the improving employment figures should keep the rally going unless we get bad earnings reports (or projections from companies) this quarter.   

The NTSM system can be late in calling a Buy after a short small drop (like we just had) so I will probably get back in soon.    

I can’t seem to get really aggressive (e.g., my previous 100% all-in in stocks) or enthusiastic about the market, because I’d like to see a couple more data points to verify this up trend or a Buy signal from NTSM analysis, but that isn’t likely until we have some big moves up. 

I am now 30% invested in stocks.  I going to look at some more data and post later if I decide to Buy on Monday.