“When the media or so-called market gurus make scary predictions of crashes and bear markets, it is far better to dig beneath the surface to see if their claims have any validity. Digging beneath the surface to detect subtle changes in the market’s character is the purpose behind my weekly "Market’s Bill of Health" reports that come out on Friday, and currently I see no indication of a market top, let alone an approaching bear market.” Read the full analysis and commentary at…
http://www.financialsense.com/contributors/chris-puplava/whatever-happened-to-hindenburg-omens
IS THE ADVANCE OF THE S&P 500 SLOWING?
A few days ago I said that the advance of the S&P 500
was slowing. That is true on a short
term basis, when looking only at year 2013.
On a longer term basis (say the last 5 yrs.) we can see that the S&P
is generally advancing at a normal pace and has not slowed. One negative apparent on this chart is the
volume on the lower graph. It has been
falling as investors begin to lose faith in the old bull.
It remains to be seen how the bearish-wedge will
play out. You may remember a number of
analysts (including me) pointed out the bearish rising-wedge at the beginning
of 2013. (See “Rising wedge; Rising Concerns” at
http://navigatethestockmarket.blogspot.com/2013/01/rising-wedge-rising-concerns.html
)
I’ve shown the top of that prior wedge with a Green-dashed
line below. Obviously, the S&P 500 simply broke thru that upper boundary
early in the year and the bearish-wedge wasn’t confirmed. This bearish-wedge may fail too, but sooner or
later the market will drop back to the lower trend line and that would indicate
a 20% correction on the above 5-year chart.
This wedge looks more likely to play out with some sort of correction, because
the upper trend line is also the major upper-trend line and it is unlikely to
be broken to the upside. The timing of a
possible breakdown is never clear and it could take a while for the S&P 500
to pull back. It is possible that the
market could make it to 1850 before a pullback occurs, but it could happen much
sooner too. (Sorry, I’m not helping much
here.)
IBM REVENUES DOWN 4%; DOWN 15% IN ASIA (Forbes)
“IBM reported more mixed earnings results on Wed. as Q3 revenue slid 4% year to year to $23.7 billion, though earnings narrowly beat Wall Street’s expectations at $3.99 per share…
...Analysts had warned in advance that the industry wide outlook for IT spending has not been a positive one between political instability and volatile currency rates. As the first “large IT vendor” to report Q3 results, Cantor Fitzgerald was expecting a canary in the coal mine type response. Right now that canary would be currently gasping for air.” Full story at….
http://www.forbes.com/sites/alexkonrad/2013/10/16/ibm-q3-revenues-slid/
IBM was down about 7% Thursday. The
markets yawned, so IBM must not be the technology bell-weather that it used to
be.
MARKET REPORT
Thursday, the S&P finished UP 0.7% to 1733 (rounded) at the close.
VIX fell 8% to 13.48.
(That’s a stunning drop considering the S&P VIX was over 20 just 7-days
ago. Thank-you politicians!)Thursday, the S&P finished UP 0.7% to 1733 (rounded) at the close.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing bounced into
positive territory to 56%. (A number below 50% for the 10-day average is
generally bad news for the market.) New-highs outpaced new-lows Thursday, leaving the spread (new-hi minus new-low) at +308 (it was +218 Wednesday). The 10-day moving average of change in the spread is plus 25.
Market Internals are now positive on the market for this
short term indicator.
NTSM
The overall long-term NTSM analysis switched to BUY at
the close Thursday.
I have been considering putting some funds back into
stocks and this, seemingly, clears the way.
I remain cautious, though, because Sentiment was 65% at the close
Wednesday and that is very close to a sell signal. If Sentiment were issuing a sell now, the
overall NTSM system would be Hold. Further,
if sentiment hadn’t been so high over the past few weeks, the system would have
sold at the tops and bought near the bottoms three times in April thru
September. That would have happened because the system is not designed for
quick reversals and that’s what the S&P 500 has done as it made several
new highs.
The S&P 500 has made 4-closes to new highs over the past several months; but todays’ is only 1% above the new high made two-and-a half months ago on 2 August. That really makes today a triple-top because there was another intermediate high in mid-September. That is very negative for the market unless it can climb significantly above the old highs. So far, it has not on 3-tries.
The S&P 500 has made 4-closes to new highs over the past several months; but todays’ is only 1% above the new high made two-and-a half months ago on 2 August. That really makes today a triple-top because there was another intermediate high in mid-September. That is very negative for the market unless it can climb significantly above the old highs. So far, it has not on 3-tries.
Bottom line: I need some more positive evidence before I buy more
stocks.
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.
