FED EXTENDS THE TWIST (CNN/Money)
“The Fed announced plans
to extend Operation Twist, the policy of swapping short-term Treasuries in the
central bank's portfolio for bonds with a longer duration. The program, which
was due to expire June 30, will continue through the end of 2012. The Fed
expects to buy $267 billion worth of bonds….Meanwhile, the Fed lowered its
outlook (see below) for economic growth this year and raised its forecast for
the unemployment rate…The cloudy economic outlook had raised speculation that
the Fed would take more aggressive steps to stimulate growth, such as
intervening directly in the bond market. But Wednesday's move falls short of
the full-blown quantitative easing that many investors have been calling for.”
FED LOWERS GROWTH ESTIMATE (CNN/Money)
“The Fed
also sees broader weakness ahead, predicting the economy will grow between 1.9%
and 2.4% this year. When the Fed met back in April, it had forecasted that the
economy would grow as much as 2.9%.”
I thought this might be a
“sell the news” day. You know the old
stock market saying, “Buy the rumor – sell the news”. There had been rumors on the web that the
Fed was going to do a QE3. There wasn’t
much selling when they didn’t, so that’s good news for the bulls.
I am still very suspicious
that this correction isn’t over. I
probably could make a pretty good argument either way. I am not seeing any strong signals (the
smoking gun); however, there has been slow steady improvement in NTSM
indicators. Given that info, and the
current position of the NTSM analysis I am inclined to wait a few more days for
some better direction. The market should
give us that guidance soon.
MARKET
The S&P 500 finished down
a couple points to 1355. VIX fell 6% to 17.24 today, Wednesday.
The falling VIX is quite
bullish, but I still don’t have a buy in the NTSM system since only the Volume
indicator is positive. All others are
neutral. It is close to a buy – but so
far, on cigar.
NTSM
The NTSM remained HOLD Wednesday,
but it is very close to a buy.
MY INVESTED POSITION
I reduced my stock
holdings to 30% (0% in stock in the 401k) at S&P 1358 after the SELL signal
on 9 May 2012. (See the page “How to Use the NTSM System” – the link is on the
right side of this page). I cut my stock
position to 15% on 17 May in order to maintain a 10% gain in a
trading/longer-term position I had in the QQQ.
