US STOCKS RISE AS FED REFRAINS FROM REDUCING STIMULUS(Bloomberg)
“The Standard & Poor’s 500 Index climbed to a record
high after the Federal Reserve unexpectedly refrained
from reducing the $85 billion pace of monthly bond buying, saying it needs to
see more evidence of improvement in the economy…The Committee decided to await
more evidence that progress will be sustained before adjusting the pace of its
purchases,” the Federal Open Market Committee said today
at the conclusion of a two-day meeting in Washington. While “downside risks” to
the outlook have diminished, “the tightening of financial conditions observed
in recent months, if sustained, could slow the pace of improvement.” Story at…http://www.bloomberg.com/news/2013-09-18/u-s-stock-index-futures-are-little-changed-before-fed.html
FOMC SHOCKER: NO TAPER (ZeroHedge)
“FED refrains from QE taper, keeps monthly buying at
$85-billionFED: Rise in mortgage rates, fiscal policy restrain growth
FED: Tightening of financial conditions could slow growth
Most FED officials see first interest rate rise in 2015.”
Story at…
http://www.zerohedge.com/news/2013-09-18/fomc-shocker-no-taper
FED REFRAINS FROM QE TAPER (Bloomberg)
“It looks like the Fed has done a major reset in terms of
expectations on what they need to see before they start to taper,” said Chris Rupkey, the chief financial economist for
Bank of Tokyo-Mitsubishi UFJ Ltd. in New York…Fed officials today reduced their
forecasts for economic growth this year and next. They forecast U.S. gross
domestic product to increase 2 percent to 2.3 percent this year, down from a
June projection of 2.3 percent to 2.6 percent growth.” Story at…http://www.bloomberg.com/news/2013-09-18/fed-refrains-from-qe-taper-keeps-bond-buying-at-85-bln.html
US CEOs LESS OPTIMISTIC ABOUT ECONOMY (Reuters)
“U.S. chief executives
were less optimistic about the economy in
the third quarter, with fewer expecting to increase sales or boost capital
spending than in the preceding three months, a survey by the Business
Roundtable showed…"While U.S. business performance remains strong,
as evidenced by robust recovery in the automotive sector, business leaders
still see headwinds preventing a more sustained, robust recovery," said
Jim McNerney, chairman of Business Roundtable and chairman and CEO of Boeing Co
(BA.N).
CEO expectations for 2013 gross domestic product growth was 2.2 percent,
unchanged from the last quarter.” Story
at…http://www.reuters.com/article/2013/09/18/us-usa-economy-roundtable-idUSBRE98H0IZ20130918
MARKET REPORT
Wednesday, the S&P finished up 1.2% to 1726 (rounded) at the close.
VIX fell 6% to 13.59. Wednesday, the S&P finished up 1.2% to 1726 (rounded) at the close.
The S&P 500 is now 9% above its 200-dMA. Even after the taper news today the market
may not have too much more upside left. 10%
above the 200-dMA has been the trouble zone for the S&P 500, but it may
manage to get a couple of percent higher now that QE will continue to solve all
problems.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing
on the NYSE was 62% at the close. (A
number above 50% for the 10-day average is generally good news for the
market.)
New-highs outpaced new-lows today, Wednesday,
leaving the spread (new-hi minus new-low) at +288 (it was +123 Tuesday), with
the 10-day moving average of change in spread strongly positive.
The Internals are positive on the market in
the short term.
NTSM
Wednesday, the overall long-term NTSM
analysis remains HOLD at the close.
With no taper, everyone seems convinced the
markets are headed up. As I noted a few
days ago; when everyone thinks the market is going to go one way, it will go
the other. The pros seem conflicted
since the last hour of trading has been down over the last 5, 10 and 40-day
periods. The Index was down today in the
last hour too.
The market has been up 9 out of the last 10-days
so it is overdue for some down time. Today
was a statistically significant up-day based on price and volume. Statistically significant up-days are usually
followed by a down day or several for that matter. So it looks like the market has some issues
and will likely trend down in the short term, but it may need to get a couple
percent higher before there is a better chance for a meaningful correction.
MY INVESTED POSITION
I remain about 20% invested in stocks as of 5 March (S&P 500
-1540). 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.
