"Is it a stretch to say that the S&P will trade at one standard deviation over its 20 year mean? That would equal 18.7 times 2014 earnings, which would put the S&P north of 2,050 – I don't think that's a stretch," he added…The naysayers will come in and say global growth is stagnant, economic growth is anemic. The reality is that this is the first year since 1995 that we've had simultaneous growth in China, Europe, the U.S. and Japan. Yes, it's slow but valuations aren't stretched," he added.
However, Krake
added that once the Fed does begin its tapering program, the S&P 500 will
see a 10-15 percent correction following the announcement. However, until this
happens, he said equities will remain extremely attractive.” - Paul
Krake, founder of View from the Peak:Macro Strategies. Story at…
http://www.cnbc.com/id/101146839
THE BAD: WHAT CATEPILLAR’S BIG DROP IN EARNINGS MEANS FOR
THE GENERAL STOCK MARKET (Sasha Cekerevac at dShort.com)
“In its corporate earnings release, Caterpillar cites
several issues that it's worried about, including uncertainty regarding U.S.
fiscal and monetary policy, the health of economic regions globally (including
the eurozone and China), and a lack of demand from customers…the firm has cut
13,000 jobs globally over the past year, reduced pay and incentives, and
initiated the “implementation of general austerity measures across the
company.”
“Considering Caterpillar is a large firm within the
S&P 500 and it has its fingers on the pulse of the global economy, do any of
these comments give you hope or confidence that either the domestic or
international economies are about to surge upward in growth? Not to me, it
doesn't.”
“This is where I raise serious questions about the
strength and health of the S&P 500. Caterpillar is one of the largest
international companies, a component of the S&P 500, and would not be
issuing such a weak forward guidance regarding potential for corporate earnings
growth unless management was truly concerned about the future.” Full story at…
http://advisorperspectives.com/dshort/guest/Sasha-Cekerevac-131028-CAT-and-the-Market-.php
THE BLAND: ADS SHOWS ECONOMY GOING NOWHERE
“The Aruoba-Diebold-Scotti business conditions index (from
the Philadelphia Federal Reserve) is designed to track real business
conditions at high frequency. Its underlying (seasonally adjusted) economic
indicators (weekly initial jobless claims; monthly payroll employment,
industrial production, personal income less transfer payments, manufacturing
and trade sales; and quarterly real GDP) blend high- and low-frequency
information and stock and flow data.” – Federal Reserve
ADS Business Conditions Index available at…
http://www.philadelphiafed.org/research-and-data/real-time-center/business-conditions-index/
MARKET REPORT
Tuesday, the S&P was up 0.6% to 1772 (rounded) for another new high at the close.
VIX was up about 0.6% to 13.39.Tuesday, the S&P was up 0.6% to 1772 (rounded) for another new high at the close.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing reversed
its downtrend and popped up to 63%. (A
number above 50% for the 10-day average is generally good news for the
market.)
New-highs outpaced new-lows, Tuesday, leaving the spread
(new-hi minus new-low) at +212 (it was +167 Monday). The 10-day moving average of change in the
spread bounced up to +12 . In other
words over the last 10-days, on average, the spread has improved by +12 each
day. This too was a reversal of downtrend.
Market Internals remain Positive on the market for this
short term indicator.
I still lean toward getting back in, after a pullback, to
speculate on a final ride to the top.
NTSM did give several buy signals last week, but the market just looks
too frothy to rush back in…we’ll see if things improve.
Today we have more evidence of frothy market action: the
S&P 500 has been up 9 out of the last 10-days and 14 out of the last 20 and
that is somewhat negative so I’ll have to be patient and wait longer.
I noted a series of divergences yesterday and predicted a
down day for Tuesday…oooops. Surprisingly
(to me anyway), today was up fairly strongly.
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. 
