The most recent FED minutes suggested that the Fed was considering lowering the rate paid on bank reserves in order to offset a QE taper. Banks have now stated that if that happens, the Banks will have to charge depositors to keep their money! Do these guys (the FED) have a clue? Article at…
http://www.ft.com/cms/s/0/b1d409d0-5399-11e3-b425-00144feabdc0.html#axzz2lf28bZnv
AVERAGE HEDGE FUND RETURNS 6% THROUGH OCTOBER (ZeroHedge)
http://www.zerohedge.com/news/2013-11-23/average-hedge-fund-returns-tiny-6-through-october-underperforms-sp-and-mutual-funds-
I have sympathy for them. The
NTSM system returns are about 10% this year.
Aaaarrgghh……
NOTED BEAR THROWS IN THE TOWEL
(Global Economic Trend Analysis)
“On November 22, InvestmentWeek reported long-time bear Hugh Hendry threw in the towel. 'I can't look at myself in the mirror': Hendry reveals why he has turned bullish Speaking at Harrington Cooper's 2013 conference, Hendry said he is no longer fighting the "two-way feedback loop" which is continuing to boost risk assets.
"I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out. I have been prepared to underperform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years' time…I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."
“On November 22, InvestmentWeek reported long-time bear Hugh Hendry threw in the towel. 'I can't look at myself in the mirror': Hendry reveals why he has turned bullish Speaking at Harrington Cooper's 2013 conference, Hendry said he is no longer fighting the "two-way feedback loop" which is continuing to boost risk assets.
"I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out. I have been prepared to underperform for the fun of being proved right when markets crash. But that could be in three-and-a-half-years' time…I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends."
[Mish’s comment]…As I stated upfront, avoiding bubbles is incredibly
hard to do, and this one has been exceptional. But that is precisely the
problem with bubbles. Hussman points out
(and I agree) "The associated
10-year expected nominal total return for the S&P 500 is negative."
Read that sentence again and again until it sinks in. Here is another way of putting it. "10 years from now, the S&P is likely to be lower than it is today". That is how over-valued equities now are. Yes, Hussman sounds like a broken record. And so do I. But this is one hell of a time to become a trend follower.” - Mike "Mish" Shedlock. Full story at…
http://globaleconomicanalysis.blogspot.com/2013/11/hussmans-open-letter-to-fed-problem.html
Read that sentence again and again until it sinks in. Here is another way of putting it. "10 years from now, the S&P is likely to be lower than it is today". That is how over-valued equities now are. Yes, Hussman sounds like a broken record. And so do I. But this is one hell of a time to become a trend follower.” - Mike "Mish" Shedlock. Full story at…
http://globaleconomicanalysis.blogspot.com/2013/11/hussmans-open-letter-to-fed-problem.html
MARKET REPORT
Monday, the S&P was down 0.1% to 1802 (rounded).
VIX was up 4%
to 12.79.Monday, the S&P was down 0.1% to 1802 (rounded).
The S&P 500 remains 9.5% above its 200-dMA. It was 9.8%, 6-trading days ago – that is a
level that has been followed by small pullbacks recently. Historically, pullbacks have been down to the
200-dMA, but not during the QE era.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing dipped
slightly to 52% at the close Monday. (A
number above 50% for the 10-day average is generally good news for the
market.)
New-highs outpaced new-lows Monday, leaving the spread
(new-hi minus new-low) at +176 (it was +168 Friday). The 10-day moving average of change in the
spread was plus 9. In other words over
the last 10-days, on average, the spread has increased by 9 each day.
The 4-measures of Market Internals that I track for this
indicator are all positive so this trend following indicator is positive on the
market in the short term.
Market Internals are a decent trend-following analysis of
current market action, but in 2013 (so far), if I had been buying the positive
ratings and selling negative ratings I would have under-performed a buy-and-hold
strategy.
NTSM ANALYSIS
Sentiment is EXTREME
negative ( Should I say absurd extreme?) at 76%-bulls for the 5-day
indicator. (Three out of four investors
in Rydex/Guggenheim funds I track are betting long.) The funds I use weren’t around until after
the dotcom bubble, but that is the highest 5-day reading since the dot.com
crash and easily beats any 5-day reading in the past 4-years. The %-bulls was 60% in July of 2007 at the
first big top in advance of the 2007 crash, but that was not a valuation crash
like the dot.com bubble.
Price and VIX in indicators turmed positive today, but overall,
NTSM is neutral. (I am mostly out of the market already.)
MY INVESTED POSITION (NO CHANGE)
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.
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 over the weeks of 14 and 21 Oct, but
the market just looks too frothy to rush back in…we’ll see if the market will
pullback so I can join the insanity. If
not, cash is fine.
