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.
