“It's important to keep in mind that several days of institutional selling, whether it's in a stock or an index, can presage more of it down the line…Few investors knew what lay ahead for the market in the second half of 2008, but the Nasdaq composite fired some warning shots with five higher-volume declines from Aug. 19 to Sept. 4….The Nasdaq sank more than 40% over the next 11 weeks. By March 2009, it fell 50% from its April 2008 high of 2551.39.”
http://finance.yahoo.com/news/heavy-distribution-day-count-often-220500812.html
CHINESE. US FACTORIES STRUGGLE, EUROPE STILL IN SLUMP
(Reuters)
“Factory output in China weakened to a nine-month low in June
while U.S. manufacturing closed out its worst quarter in the last four,
suggesting the road to recovery for the world economy remained an uneven one……"A slowdown in the Chinese economy doesn't help the outlook for the U.S. particularly, but American growth isn't entirely dependent on what happens in China," said Philip Shaw, chief economist at Investec…
…U.S. growth picked up in the first three months of the year, boosted partly by a recovering housing market, though the pace is expected to drop off in the second quarter.” Story at…
http://www.reuters.com/article/2013/06/20/us-economy-global-idUSBRE95J0CX20130620?feedType=RSS&feedName=businessNews
END OF QUARTER AHEAD
Be prepared for more shake, rattle and roll. Markets
could be in for another bumpy week as investors adjust to higher yields and
institutions shuffle portfolios ahead of the quarter's end.http://www.cnbc.com/id/100835492
MARKET RECAP
Friday, the S&P 500 was up 0.27% to 1592 (rounded).
VIX was down about 8% to 18.90.Friday, the S&P 500 was up 0.27% to 1592 (rounded).
VOLUME
Volume was huge Friday; the NYSE saw twice the volume that has been the
norm over the past month. Couple that
with the small movement on the S&P 500 (only about a quarter of one percent
upward) and we have what I call a distribution day. (This is a bit different than the definition
of a distribution day that involves keeping a count of high volume days.) Today,
a lot of people wanted to sell and even more wanted to buy. I’m tempted to suggest that the buyers represent
the dumb money buying at the wrong time.
The sellers…they’re the smart money.
Will that interpretation be correct?
I don’t know.
I think I can say that since Markets rarely move in only one direction, I
wouldn’t be surprised to see a bounce up to around 1620-1625.
NTSM
Friday, the overall NTSM analysis was again SELL at the close.
Sentiment, Volume and VIX are all negative. Add in the “panic-indicator” that flashed
sell Thursday (on the huge down day) and NTSM analysis is firmly in the
negative camp.
MARKET INTERNALS
Internals were unimpressive today.
The number of stocks advancing today was only slightly ahead of the
number of decliners; new-high/new-low data was abysmal with 34 new highs
compared to 387 new lows. I had to go
back to 4 October of 2011 to find more new lows on a given trading day; there
were 972 that day as the markets completed a correction low. Bottom line: The new-high new-low data isn’t
signaling a turn-around because, even on the up day today, it
deteriorated.
SENTIMENT remains extreme: (The
broken record report.) The 5-day moving average was 67%-bulls in the
Guggenheim/Rydex funds I track as of Friday’s close. That was down only 1% from Thursday. On Thursday at the close, 65% of investors
were betting that Friday would be up.
They were right, but that’s still a bit surprising given the monster
down day Thursday. This overly bullish
stance of traders means that the correction has further to go.
MY INVESTED POSITION
I remain about 20% invested in stocks as of 5 March (S&P 500
-1540). My reasoning may be found at… http://navigatethestockmarket.blogspot.com/2013/03/why-i-got-mostly-out-of-stock-market.html
The NTSM system sold at 1575 on 16 April. (This is just another reminder that I should follow the NTSM analysis and not act emotionally – I am under-performing my own system by about 2%!)
I have no problems leaving 20% or 30% invested. If the market is cut in half (worst case) I’d
only lose 10%-15% of my investments. It
also hedges the bet if I am wrong since I will have some invested if the market
goes up. No system is perfect.
