Big Move today in the Stock Market

Today’s action was OK – big UP days are always better than big DOWN-days.  I would, however, prefer slow and steady up movement rather than a day like today (a big move can sometimes signal a shift in direction), but we’ll take it.

When I look at some of the data I keep, specifically volume/price charts, it looks like we may see some sort of top in the month or months ahead.  That’s not a call that we can trade so we’ll need to see how it plays out.  I am just putting out a caution flag.  In the mean time, I’ll be looking at the daily output of the Navigate the Stock Market numerical model to see if we get a sell. 

“Despite the "lost decade" since the extreme valuations of 2000, valuations are now presently at about the same level from which prior secular bear markets have just started. There is no basis to expect a secular bull until we observe the valuations from which they have invariably started. Meanwhile, the recent cyclical bull market from the 2009 low has already run the same duration and slightly further than the typical cyclical bull in a secular bear. .” - John P. Hussman, Ph.D.,31 May 2011 Weekly Market Comment, http://www.hussmanfunds.com, used with permission.

{Secular trend - a major 15 to 20-year trend.  We are currently in a Bear that has lested more than 10-years.

Cyclical trend - the smaller up and down moves within the secular trend.  We are currently in a cyclical Bull that has lasted roughly 2-yrs.}

The NTSM analysis switched to BUY on 20 April.  Today there is not much change - all indicators are still neutral, so the NTSM analysis is still HOLD.

 I remain 100% long in stocks in the Long-term portfolio and 75% long in the trading portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.

Navigate the Stock Market - Still a HOLD

As of Friday, all indicators were neutral, so the NTSM analysis is still HOLD. I think we go up from here - at least for a while. 

As they say, trade what you see, not what you think, but I remain 100% long in stocks in the Long-term portfolio and I am 75% long in the trading portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.

My analysis – the stock market is going higher

We had a low volume day today on the S&P 500 with about 15% less volume than we’ve had over the last month.  This doesn’t really tell us much though.  Low volume is normal after a bottom, because traders don’t know if we’ve really bottomed and are cautions.  Also, low volume could mean there is little interest in buying so the brief rally we’ve had in the past 2-days may not be sustained.  As always, we’ll have to wait and see.

“Is the glass half full, or half empty?
It depends on whether you're pouring, or drinking.” – Bill Cosby

The Navigate the Stock Market analysis is a HOLD again today.  The Navigate the Stock Market analysis switched to BUY on 20 April and has been Hold or Buy since then.

I remain 100% long in stocks in the Long-term portfolio and I 75% long in the trading portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.

The Wednesday Update of the Navigate the Stock Market System

It looks like Monday was a mini-test of the prior 18 April low of 1305 on the S&P 500.  On 18 April the volume was 4.8 billion shares traded, 127% of its 20-day moving average.  That indicates a degree of panic at that interim low on 18 April.

Monday, we closed at 1317 (about 1% above the 18 April low – I’d prefer to see a close below the previous low) but we got there with only 3.3-billion shares traded, or about 84% of the 20-day moving average of volume.  Market internals improved too. That indicates a degree of comfort with this level on the S&P as of Monday’s close (or at least that selling is drying up), so I would have expected to see upward movement on Tuesday.  We did get it today so some investors/traders agreed with me, even if they were late :>).  I think we continue up from here, though not in a straight line.

The S&P 500 index is now 6% above its 200-day moving average.  At the 18 February Top it was 15.2% above the 200-dMA so that’s a good number.

1.5 billion dollars (net) was pulled from domestic mutual funds in the past week for a total of about 5.7-billion over the past 3-weeks.  That’s no surprise given the recent “turmoil.”

SUMMARY OF NTSM INDICATORS:

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

SENTIMENT:  Neutral.  Sentiment was still 55% Bulls as of the close yesterday.  It is high, but not a sell yet. 

PRICE: Neutral. Price action has been more to the upside and this trend is likely to continue.  

VOLUME: Neutral. Volume has been more down than up. 

VIX: Neutral.  VIX was 17.07 today.  You have to go back 2-weeks to get a lower reading.

NTSM is HOLD today, but I think we look pretty good, baring unforeseeable issues. 

The Navigate the Stock Market analysis switched to BUY on 20 April and it is HOLD today                                

I remain 100% long in stocks in the Long-term portfolio and I reset the trading portfolio yesterday to 75% stocks. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.  I am beginning to question my own trades because there are many risks to the market now including debt problems, Greece default problem, political posturing, increasing oil prices, end of QE2…you get the idea.  I really should cut back on the stock % just on general principles.

NTSM Still a Hold

My power was out yesterday due to strong thunderstorms in the area.  Here’s yesterday’s post and a quick update.

Quick update: The NTSM analysis is still hold.  We had low volume on Monday and that may mean the downtrend is close to ending...assuming we don’t have a rash of bad news.

Yesterday’s post:

HERE’S AN IMPORTANT REVIEW OF QE2:

Excerpts on QE2 from an article in Marketwatch by Brett Arends (senior columnist for MarketWatch and a personal-finance columnist for the Wall Street) Journal at.... http://www.marketwatch.com/story/qe2-was-a-bust-2011-05-21   

“QE2 has created a massive new bubble in dollar-based financial assets, from stocks to gold. Meanwhile, it has had zero visible effect on the real economy....

(JOBS) ...The percentage of the population in work is actually lower today — 58.4%, compared to 58.5% last August....

(HOUSING) ...the average price of an “existing” (i.e. used) home was $177,300 in August, just before QE2. Today? It’s $163,700 — or 8% less...

(GROWTH) ...Economic growth has slowed. It was 2.6% last summer. It’s a miserable 1.8% now....

(RETAIL) ...Retailer Gap on Friday became the latest economic bellwether to warn on weak sales and rising costs....

Meanwhile QE2 has created an entirely artificial bubble in all dollar-based assets.

Look at the stock market. Since Aug. 27, when Bernanke unveiled his plan for QE2 in Jackson Hole, Wyo., the S&P 500 has risen by 26%.

So far, so good, right? But it’s an illusion. What’s really happened is a decline in the value of the dollars that the shares are measured in.

Measured in hard currencies, the stock market boom has been much less impressive. In Swiss francs, the S&P has risen by just 8.4% since Aug. 27. In currencies like the Swedish krone and Australian dollars it’s even less. Measured in gold, the S&P 500 is up just 4.5%.

Meanwhile the illusion of a boom is causing all sorts of investors to take crazy risks. Witness LinkedIn’s IPO. Economists from the so-called “Austrian” school say this is a reason to go back to a gold standard. It certainly makes you wonder what’s next.”

HERE IS WHAT I THINK IS NEXT...

A significant drop in the price of stocks (>25%) is coming within a year...we just don’t know exactly when.

Nothing like some bad news to worry the stock market

On Friday, rating agency Fitch cut Greece's credit rating by three levels to "highly speculative," basically junk bond status. In addition, Standard & Poor's cut Italy's outlook to 'negative' from 'stable.'

 f that weren’t enough we read every day that the Fed's quantitative easing program is set to expire in June.  That “news” is so old it really doesn’t matter at this point.

Markets are jittery though, and we broke several trend points so it looks like we are in a down trend. I can’t really tell at this point if the trend is up or down. To manage risk, I sold ½ of my trading positions today (at a 2% loss – ouch, I hate being wrong).  I will zero out the trading portfolio unless we go improve tomorrow. 

NTMS is still Hold and I am cautious at this point. 

 I remain 100% long in stocks in the Long-term portfolio and 40% long in the trading portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people (including me) and I don’t recommend it unless you have a high tolerance for risk. 

What’s wrong McFly….Chicken? (a stock market commentary, no doubt)

Sometimes I think we are playing chicken with the stock market.

 CNN/Money.com implied today that the lower gas prices we are now seeing are a bad thing and said, “Sagging economic expectations, after all, are the likeliest route to lower energy costs…There are plenty of signs economic growth is slowing. U.S. gasoline demand has fallen more than 2% over the past year, suggesting that high prices have already started to weigh on the economy…Uber-bear David Rosenberg cites recent declines in architectural billings, small business optimism, house price and manufacturing indexes.”    http://finance.fortune.cnn.com/2011/05/20/do-falling-gas-prices-spell-recession/

 The were some bad retail numbers reported today…"When you see these retailers give numbers like this, you get concerned that the consumer is starting to give up some ground, with high oil prices and all," said Anthony Conroy, head trader at BNY ConvergEX. http://money.cnn.com/2011/05/20/markets/markets_newyork/index.htm?iid=HP_LN

 As I previously noted, Robert Reich economist and former Labor Secretary in the Clinton Administration wrote several weeks ago, “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.”

 …and yet here we are, fully invested, expecting the stock market to make further gains.  It won’t last forever, but I don’t think we’ve made a top yet.  We’re right back at the lower trend line so we’ll get concerned if we go down further, because it may break the trend.  I still think we are in an upward trend.

 The Navigate the Stock Market analysis switched to BUY on 20 April and it is HOLD today                                

I remain 100% long in stocks in the Long-term portfolio and 80% long in the trading portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk. 

Looking good, Billy Ray! Feeling good, Louis…

NTMS switched to Hold today, but it is still well to the bullish side of things.  Leading Economic indicators slipped this week showing the economy has slowed, but it is still growing.  Earnings were good last quarter so I think we continue to advance.   

The Navigate the Stock Market analysis switched to BUY on 20 April and it is HOLD today                                

I remain 100% long in stocks in the Long-term portfolio and 80% long in the trading portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk. 

The Wednesday Update of the Navigate the Stock Market System

The S&P 500 index is now 8.5% above its 200-day moving average.  That is an encouraging statistic because at the 18 February Top it was 15.2% above the 200-dMA.  So the 6% correction and the sideways action since then have managed to reduce this previously disconcerting statistic to a more manageable number - that should help us to go up from here.

There is enough fear in the market that 2.4 billion dollars (net) have been pulled from domestic, stock mutual-funds in the past 2-weeks.  Our indicators are looking up though.

SUMMARY OF NTSM INDICATORS:

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

SENTIMENT:  Neutral.  Sentiment is an elevated 55% Bulls.  It is high, but not a screaming sell yet.  Since the NTSM system requires multiple indicators to agree before we get a sell signal, high sentiment alone will not put us in a sell mode.

PRICE: Buy. Price action has been more to the upside (even in the down trend).  

VOLUME: Neutral. Volume has been more down than up.  No surprise there.  This is a momentum indicator and downward moves in the market are going to send this indicator in a negative direction.  It has not, however, fallen far enough in the red to indicate a sell.

 VIX: Buy.  VIX is now buy based on the 7.5% reduction in VIX today.  VIX is one of our better indicators so this is encouraging.

NTSM turned to BUY today and I think we look pretty good, baring unforeseeable issues.  The clowns in Washington could derail everything in a heartbeat if they continue to play games with the debt ceiling.

The Navigate the Stock Market analysis switched to BUY on 20 April and it is BUY today                                

 I remain 100% long in stocks in the Long-term portfolio and 80% long in the trading portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk. 

The Navigate the Stock Market analysis is still hold.

While we did break the uptrend going back to the end of March, we did not break the longer term trend line going back to last August so I remain cautiously optimistic for the near term. 

The Navigate the Stock Market analysis is still hold.

I remain 80% 2x long in the trading portfolio and 100% long in the Long-term portfolio.  This is way too aggressive and I don’t recommend it unless you have an extremely high tolerance for risk. 

Stock market choppy on Debt concerns

I added long positions Thursday and Friday of last week in the trading portfolio and the market handed me my lunch today.  We broke below the trend line so it is possible that we will trend down further.  It looks like the Debt issue (ours and theirs) won’t go away. 

I am always suspicious; too, that there may be market manipulation going on designed to bring market prices down so the manipulators (whoever they are) can buy things on the cheap.  Let’s face it, if a flash crash (huge drop in the market that was so bad the SEC stepped in and canceled trades) can be caused by a few computer trading firms that stopped trading, the capability is there to manipulate the market.  I like that explanation better than I was stupid for taking on so much risk.  I will find out tomorrow whether I need to dump those positions. 

So…if you’ve read this blog for a while, you know one of my favorite market commentators is John Hussman, PhD of Hussman Funds.  This week he says, “The stock market continues to be strenuously overvalued here, with a variety of historically reliable methods indicating probable total returns for the S&P 500 of only about 3.5% over the coming decade. This does not necessarily imply much about near-term market returns, though the continuing syndrome of overvalued, overbought, overbullish, rising-yield conditions does contribute to near-term risk.”  - John Hussman, PhD, weekly Market Commentary, Hussman Funds.com

He also presents the average length of Bull markets within secular (long-term) bear trends.  If you look at his data, you see that (based on average past history) we are due for this Bull trend to end…now.  I updated the “Comparison of the 1966 Bear Market to the Present” bear a few days back and my conclusion is similar to Mr. Hussman.  Just based on the 1966 Bear market, the current Bull would end in September. 

Now that is just average data and I continue to hope we will be able to get back to the old highs (1550).  Only time will tell. Be vigilant.

The Navigate the stock Market analysis is Hold today.  Price action improved - the down days just haven’t been that big. VIX is in good shape.  Overall I am still not overly worried.  I’ll worry tomorrow if we break down again.

NTMS switched to BUY on 20 April at S&P 500 = 1330.  Since then, NTMS analysis has been Buy or Hold (it is Hold today); therefore, I am 100% invested in stocks.  This is way too aggressive and I don’t recommend it unless you have an extremely high tolerance for risk.  I am also 2x-long with 80% of my trading portfolio using SSO and the Rydex 2xS&P  500 fund (which I may regret tomorrow).  This is way, way, too aggressive…

Navigate the Stock Market is still Hold

I don’t have final numbers yet but I think we can say the NTSM analysis is Hold today. This is the 8th-straight day of hold. 

Even so, I am relatively bullish in the near term and I have added long positions using leveraged ETF’s and the Rydex 2xS&P Long fund in the trading portfolio.

The Navigate the Stock Market analysis switched to BUY on 20 April and it is HOLD today. I remain 100% long in stocks in the Long-term portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk. 

Stocks are on sale today

I bought more in the trading portfolio today.  I’m now 80% long in the trading portfolio and 100% long in the long-term portfolio. 

Bought more stocks yesterday (12 May)

Blogspot was “read only” yesterday and for much of today (no posting due to technical issues).  Here’s yesterday’s post.

“If we cannot end subsidies to the five biggest, most profitable corporations in the history of the planet, that come from the federal taxpayers, then I don't think anyone should take us seriously about deficit reduction,” said Sen. Claire McCaskill (D) of Missouri

It always amazes me how the politicians claim “Big Oil” is making huge profits.  Their profit margins are about 10%.  Apple’s profit margin is 20% but you don’t hear anyone claiming Apple’s profits are too high.  Exxon Mobile’s total profits are large because they sell a lot of oil.  10% is a reasonable profit per unit sold.

I saw Senator Chuck Schumer stating that oil subsidies should be eliminated for a savings of 21 billion…over 10-years.  That’s 2B per year folks or about 1000 times less than the budget deficit.  I agree that the subsidies should be eliminated, but why pretend that the amount of money is significant?

Now here is what is really amazing.  The sum of earnings before interest, tax, depreciation and amortization (EBITDA) of just 2-oil companies, Exxon Mobile and Chevron, is about 100-Billion per year; so 2-Billion is even a small number for the oil companies.   In the end, the entire hearing is a political farce…completely meaningless; the amount of money isn’t worth arguing about.  It’s all political posturing on both sides.  The oil companies are just worried if they lose the subsidies the politicians (Democrats) will take more next time around.

The Navigate the Stock Market analysis switched to BUY on 20 April and it is HOLD today                                

I went 65% long in the trading account yesterday using a 2x long S&P fund. My trading account is roughly 15% of the long-term account.   I am positive on the market since we just finished a period of turmoil; the trend is up; new money is coming in; the dollar should get stronger; a stronger dollar will reduce commodity cost lowering inflation risk; a strengthening dollar will attract foreign investors.  Longer term…I am very cautious and will be ready to get out quickly if the market hiccups.  When everyone piles in, it will be time to get out.

I remain 100% long in stocks in the Long-term portfolio. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk. 

The Wednesday Update of the Navigate the Stock Market System

Big days like today (down more than 1%) can always cause some angst.  In this case, I don’t think we should worry much.  There are some good things about today.  Today’s close is right on the lower trend line that has now moved up to 1342.  On a price and volume basis, today’s close is in line with current up-trends and probably represents another short term low.  Because I am optimistic about today’s action, I will add some leveraged longs in the trading account tomorrow unless the market takes off in the morning.

SUMMARY OF NTSM INDICATORS:

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

SENTIMENT:  Neutral.  %-bulls indicator was 60% as of yesterday’s close (data is not available until later tonight).  66% is our sell point for this indicator and this indicator was sell 3-days ago.  I figure when 2 out of every 3 people are betting that the market will move up with leveraged mutual funds, it is time to sell.  (We’ve based that indicator on years of comparison to moves in the S&P.)  This is a stat to watch, but it takes more than one indicator to turn the entire NTSM system to sell.  We had 2-weeks of high sentiment values in early April without an overall NTSM Sell signal.

PRICE: Neutral.  The Price analysis indicator moved into neutral territory today. 

VOLUME: Neutral.  Volume has been relatively balanced between the up and down moves in the S&P.

VIX:  Buy.  Our VIX indicator turned to Buy 3-days ago.

SUMMARY: NTMS switched to BUY on 20 April and it is HOLD today.  The Hold puts us on alert that we might reverse to a Sell, but that is far from certain.  It is not at all unusual for NTSM to fluctuate between Buy and Hold during a sustained upward movement of the S&P 500.

I remain 100% long in stocks. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.  I may go to more than 100% if I add leveraged longs tomorrow.

Navigate the Stock Market still holding Long

The Navigate the Stock Market analysis is Hold today.  The VIX indicator improved. Sentiment is still high, though not a screaming sell.  Even with the negative sentiment, NTSM could go back to Buy with a strong up-day. 

 At the same time, the S&P 500 is still 10% above its 200-day moving average so; I wouldn’t be surprised to see another correction (or sideways action for awhile) if we move up another 5%.  As I’ve said before, that stat is not in the NTSM system because it is not reliable at calling a top or bottom, but I think we can see the general trend.  For 2010 and 2011 corrections have started when the 200-dma was around 15% and one started at 10%..

The wild swings in silver suggest that we may be seeing the end of the commodity trade and we may have seen the top.  I view that as positive for stocks since those folks will want to invest somewhere.  Why not stocks?

 The Navigate the Stock Market system switched back to Buy on 20 April so I remain 100% long in stocks. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.

Sentiment AT extreme values

A more accurate title for yesterday’s blog would have been “Sentiment AT extreme values”.  Sentiment is sky high, but that doesn’t always indicate a problem.  Usually, the crowd is wrong and you can bet on it. (i.e., when 2/3 of investors are playing options on the buy-side, it’s time to sell).  Sometimes, however, the crowd is right.  That happens after a major correction and everyone goes long as the market goes up.  Did we just get thru a major correction?  Not exactly, but we did have a period of mostly sideways action that lasted from 18 Feb to 26 April…more than 2-months…and included a 6% correction.  That was followed by good news on earnings and employment.  So is it simply, the crowd is right this time?  Maybe so. 

Sentiment is a lagging indicator and all of our other indicators are currently neutral, so I don’t see any confirmation of the high sentiment reading.   We’ll see.

NTSM analysis was HOLD today.

The Navigate the Stock Market system switched back to Buy on 20 April so I remain 100% long in stocks. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.

PS. I tried to check sentiment values over at the Investor’s Intelligence Survey at Market Harmonics.  That free service is now gone and Investor’s Intelligence has become a subscription service.  Their sentiment data was derived from polling financial advisors, but I’d rather use my data since mine is based on where investors are putting their money.

Sentiment is reaching extreme values

Sentiment reached 66% Friday, so 2 out of every 3 traders using the Rydex leveraged funds we track are betting that we have up days ahead.  That is a big concern since Sentiment is an inverse indicator.  Strong bullish sentiment correlates to negative stock market returns…usually, but not always.  Sometimes the crowd is right for a awhile.    

The rest of the NTSM indicators are neutral so we are not yet ready to issue another sell.  We’ll just have to watch and wait.

I remain 100% long in stocks. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.

Navigate the Stock Market is still a hold

No change today; still a Hold.  I doubt that I would be quick to sell even if the NTSM system had switched to sell.  The reported earnings have been pretty good and the bottom channel, trend-line looks like it is around 1325.   

The S&P 500 is now 9% above its 200-day moving average so one statistic that I worry about is getting better.  We may also see some increased short selling today so the sentiment numbers may get better too.  I won’t get that data until later tonight.

I expect that we will start moving up in the next day or two.

I remain 100% long in stocks. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.

The Wednesday Update of the Navigate the Stock Market System

The Investment Company Institute reported today that $726-billion flowed out of US equity mutual funds for the week ending 27 April (the most recent data available).  Still, the trend looks up to me.  We’ve had 14-billion in inflows in the 4-months since 1 Jan.  The previous 4-months saw 33-billion in out-flows.  As I said last week, this new money is probably what we need to get the market moving up on higher volume.   

 SUMMARY OF NTSM INDICATORS:

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

 SENTIMENT:  Neutral.  %-bulls indicator was 62% as of today’s close.  66% is our sell point for this indicator.  I figure when 2 out of every 3 people are betting that the market will move up with leveraged mutual funds, it is time to sell.  (We’ve based that indicator on years of comparison to moves in the S&P.)  This is a stat to watch, but it takes more than one indicator to turn the entire NTSM system to sell.  We had 2-weeks of high sentiment values in early April without an overall NTSM Sell signal.

PRICE: Neutral.  The Price analysis indicator moved into neutral territory today. 

VOLUME: Buy.  Even with todays down day, volume has been more on the up-side recently so this indicator is still a Buy.

VIX:  Neutral.  Our VIX indicator turned Neutral today.  It is still in positive territory, but not strong enough to generate a Buy.

SUMMARY: NTMS switched to BUY on 20 April and it switched from BUY to HOLD today. The Hold puts us on alert that we might reverse to a Sell, but that is far from certain.  It is not at all unusual for NTSM to fluctuate between Buy and Hold during a sustained upward movement of the S&P 500.

I remain 100% long in stocks. (See the page How to Use the NTSM System).  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.

The Stock Market was Down, but not out today…

The NTSM analysis can improve on down days.  Even though we had a down day our Price, Volume and VIX indicators all improved.  I won’t know till tomorrow if sentiment improved since that data is published late

 NTSM is still a BUY.   I said a few days ago that we might have a few down days and trade as low as 1305.  At this point I think 1325 is the near term low (at worst).  We’ll see.

Expecting the Stock Market to keep moving up

I attended a college reunion last weekend and I am always impressed by my former roommates.  The three are: (1) an Air Force specialist in systems integration for bombers who is high in the food-chain at the Pentagon; (2) a pediatric cardiologist; (3) a senior executive (near the top) in a multi-national corporation.  I am a Civil Engineer.  Can you guess who drives the Chevy? 

So somehow the conversation wandered to corporate taxes, and you know who led that discussion. (If you are not sure, it’s #3.)   To paraphrase, he said, if you tried to create a more screwed up corporate tax system, you couldn’t do it.  We have the highest corporate tax in the world and that encourages corporations to go overseas; but we have so many loopholes in the tax code that corporations, for the most part, don’t pay taxes.  The jobs go overseas and we don’t get significant revenue?  Politicians – I am avoiding the temptation to go on another rant.

It was nice to see VIX below 15 last week. VIX was up 8% today to 15.99 and we will watch that trend closely.  

The S&P 500 is now 11% above its 200-day moving average.  The 2010 correction started last April when the S&P was 12.8% above the 200-day moving average.  We follow that statistic, but it is not in the NTSM system since it is fairly unreliable in predicting a correction start or finish.  There’s just too much variability.   I point it out just to note that we are again approaching a high level of bullishness by some measures.  Our Sentiment indicator is only 50% though and other than the one stat, things look OK for now.

 
The Navigate the Stock Market analysis switched to BUY on 20 April and it remains a Buy again today. The Buy indication means we are positive on the market, but the official Buy recommendation was on 20 April.   

I currently am 100% invested in the stock market.  That is way too aggressive for most people and I don’t recommend it unless you have a high tolerance for risk.