Correction Near…Chicago PMI Down…Consumer Confidence Up…No Secular Bull Market

Here are a few “experts” suggesting now might be a good time to sell.

TIME TO SELL?

Why your first move in 2014 should be to sell: Strategists (Yahoo Finance)
“…BTIG's Chief Global Strategist Dan Greenhaus notes that corporate bonds spreads above Treasury bonds are now as low as they were in 2007 (meaning more expensive), equity six-month target prices forecasted by many strategists have already been reached, and low-quality stocks are leading the market.
…CNBC contributor Gina Sanchez, founder of Chantico Global, cites indicators like the AAII Sentiment Survey as an example of market complacency. Last week's survey sentiment was 55% bullish versus 18.5% bearish. In mid-August, it was 29% bullish versus 43% bearish...

…Sanchez notes that the 11 rallies since 1950 averaged 53 months; the currently rally is now 57 months old. And, she believes that the market is in a third phase of its rally. Whereas the first phase (2009 – 2010) was started when stocks were cheap after the 2008 sell-off, and the second phase (2010 – 2011) came from earnings growth via cost-cutting, Sanchez sees this third phase as being fueled by low-cost financing which is about to end as interest rates move higher.  "I think we're probably due for some consolidation," says Sanchez."

...CNBC contributor Andrew Busch, editor and publisher of The Busch Update, says the technicals are also indicating a correction could be near.” Video and partial transcript at…"

http://finance.yahoo.com/blogs/talking-numbers/why-first-move-2014-sell-strategists-144711439.html

CHICAGO PMI DECLINED – BUT IT’S NO CAUSE FOR CONCERN (Briefing.com)
“Manufacturing activity decelerated in the Chicago region as the Chicago PMI dropped to 59.1 in December from 63.0 in November. The Briefing.com consensus expected the index to fall to 60.0…The drop in the index is not concerning. A reading above 60 is not sustainable for a long time and the index exceeded that threshold in both October and November. The trends do not point toward a drop below 50 -- the actual expansion/contraction threshold -- any time soon.” Charts and summary analysis at…

http://www.briefing.com/Investor/Calendars/Economic/Releases/chi.htm

CONSUMER CONFIDENCE SNAPS BACK (MarketWatch) 
“U.S. consumer confidence bounced back in December after declining in November and October, the Conference Board said Tuesday. The consumer confidence index jumped to 78.1 from a revised 72% in November. It's the highest reading since September…
Story at…
http://www.marketwatch.com/story/consumer-confidence-index-snaps-back-in-december-2013-12-31?link=MW_latest_news

A NEW SECULAR BULL MARKET? – NO (Lance Roberts)

“…we are currently 13 years into a secular bear market which the average historical secular bear market has averaged 17 years. In a complete vacuum of other data, it would suggest that the current secular cycle still has roughly four more years, and one more nasty decline, to come…”

[Recently we have seen a number of pieces that suggest that a secular bull market has started. Lance Roberts presents a collection of data and charts refuting the idea. He concludes:]

“…It is entirely conceivable that the current momentum driven markets, fueled by ongoing Federal Reserve interventions, could certainly drift higher in the months to come. However, the reality is that the current underlying demographic trends, economic realities and market fundamentals do not provide the base to support current price levels much less the entrance into a secular bull market akin to that of the 80's and 90's.  Of course, with virtual entirety of Wall Street being extremely bullish on the markets and economy going into 2014, along with bullish sentiment at extremely high levels, it certainly brings to mind Bob Farrell's Rule #9 which states: "When all experts agree - something else is bound to happen." – Lance Roberts posted at Streettalk Live and dShort.com at…

http://advisorperspectives.com/dshort/guest/Lance-Roberts-131230-Correcting-Some-Misconceptions.php

Have a Happy and safe New Year!

MARKET REPORT

Monday, the S&P 500 was up 0.4% to 1848 (rounded)
VIX rose 3% to 14.00. 

The 10-year Treasury Note closed at 3.03% yield, above the 3% worry limit for the second time in the last 3-trading days. (Many worry that 3% is a magic trouble number for the stock market.)

(Doug Short has detailed Treasury Yield history at…
http://advisorperspectives.com/dshort/updates/Treasury-Yield-Snapshot.php)

NYSE Volume was about 75% that of a regular day.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing remained 60% at the close Tuesday.  (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 +229 (it was +129 Monday).  The 10-day moving average of change in the spread was +19. In other words, over the last 10-days, on average, the spread has increased by 19 each day.

Market internals remained neutral on the market. 

 

 

 

 

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

The 5-dMA of sentiment remained 83%-bulls (Friday) in the Rydex/Guggenheim long/short funds I track.  This is an incredibly high value and the 5-day sentiment value was again the highest I have ever seen (data back to 2003). High sentiment is a negative indicator for the stock market – but it hasn’t stopped the market all year.

The S&P 500 dropped to 10.1% above the 200-dMA and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012).  Other indicators are all neutral of positive. 

 

The rise in VIX is a worry, but it's not yet high enough  to clearly indicate trouble.

The most recent BUY signal for the NTSM system was 25 October.  The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

 

 

MY INVESTED POSITION

I am about 30% invested in stocks as of 20 December (S&P 500-1540) because I upped my stock holdings by 10% on the 20^th of December.  Unless I get a SELL signal in the NTSM system, I will continue to income-average (a little each month) into the stocks to get my %-invested up to around 50% (max for me now) unless there is a correction that would allow me to move in sooner and at a higher percentage.  I expect the markets to pullback in the first quarter of 2014, but it remains to be seen whether it will be another small buy-the-dip event or something more. 

(A good rule of thumb for percent invested is to subtract your age from 100 and put that amount into the stock market.  Generally a minimum of 50%-50% stocks and other investment is a reasonable value for the over 50-crowd; that’s my group.  With bond yields rising keep to the short end of bonds, i.e., less than 10-year maturity or mutual funds that focus on the short end.)

Hussman: Risk of Stock Market Crash

ESTIMATING THE RISK OF MARKET CRASH (Hussman Funds)
Excerpts from the Hussman commentary follow…
“As I noted a few weeks ago “The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There’s no calling the top, and most of the signals that have been most historically useful for that purpose have been blazing red since late-2011.” My impression remains that the downside risks for the market have been deferred, not eliminated, and that they will be worse for the wait…
…With regard to present market conditions, the increasingly severe overvalued, overbought, overbullish features of the market here are coupled with soaring margin debt as speculators accumulate stock with borrowed money; record issuance of low-grade “covenant lite” debt; heavy issuance of new stocks – particularly characterized by speculative narratives; and a price trajectory that is eerily well-described by the mathematics of a “log-periodic bubble” that economist Didier Sornette described a decade ago, and has regularly been observed in financial bubbles across asset classes and countries across history…
…My guess is that the present speculative advance may have a few percent to run – I’ll be particularly concerned if the market does so in a rapid, uncorrected manner in the next couple of weeks, which could suggest crash probabilities approaching 100% based on the sort of analysis above.” John Hussman, PhD, Weekly Market Commentary for 30 December 2013 from Hussman Funds at…
http://www.hussmanfunds.com/

NYSE MARGIN DEBT BARELY BELOW ALL-TIME HIGHS (dShort.com)

“In real (inflation-adjusted) terms, the latest margin debt is at an interim high, 0.7% below the all-time high in July 2007 [and above the prior high in 2000].” Analysis and charts at…
http://www.advisorperspectives.com/dshort/

That is negative for the markets and suggests a significant correction/bear market, possibly in a few months.

Art Cashin predicts a small correction…

SMALL CORRECTION COMING – ART CASHIN (CNBC)

"The markets should see a correction ranging from 3 to 5 percent in mid-January as the year-end rally loses steam and indexes veer away from their moving averages, UBS' Art Cashin said Monday. "It's been a heck of a run, and it's time for a rest," Cashin said on "Squawk on the Street." "But given the seasonality, the conventional wisdom is that you'll stay relatively strong going into around the 10th or 15th of January and then you might see a correction." Full story and video at…
http://www.cnbc.com/id/101301396

And then there is the bullish case…

15 TO 20-YEAR BULL MARKET (CNBC)

"We've been very clear over the past several years that we believe that we have entered a 15- to 20-year equity bull market, [a] secular bull market," [Brian Belski] the chief investment strategist at BMO Capital Markets said Monday on CNBC's "Squawk on the Street."  Story and video at…
http://www.cnbc.com/id/101301707?__source=yahoo%257cfinance%257cheadline%257cheadline%257cstory&par=yahoo&doc=101301707%257c%27We+have+entered+a+15-+to

My feelings on the possibility of a new secular bull market were covered on 23 December…(basically I’m skeptical)…See it here…

I try not to guess too much about the future, because I don’t know what will happen.  I use the NTSM system to track the market.

MARKET REPORT

Monday, the S&P 500 was unchanged at 1841 (rounded)
VIX rose 9% to 13.56.  That suggests options players suspect trouble ahead after the holidays.

10-year Treasury Note closed at 2.98% yield, below the 3% worry limit. (Many worry that 3% is a magic trouble number for the stock market.)

(Doug Short has detailed Treasury Yield history at…
http://advisorperspectives.com/dshort/updates/Treasury-Yield-Snapshot.php)

NYSE Volume was about two-thirds that of a regular day.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing fell slightly to 60% 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 +129 (it was +181 Friday).  The 10-day moving average of change in the spread was +18. In other words, over the last 10-days, on average, the spread has increased by 18 each day.

Market internals moved to neutral on the market.  This was due to the most volatile component in my internals basket – the advancing volume.  I suspect this is meaningless, because the low volume means the up-volume that I track has been low too.  I probably should go back and change this to a %-of total volume rather than the daily number.

 

 

 

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

The 5-dMA of sentiment remained 82%-bulls (Friday) in the Rydex/Guggenheim long/short funds I track.  This is an incredibly high value and the 5-day sentiment value was the highest I have ever seen (data back to 2003). High sentiment is a negative indicator for the stock market – but it hasn’t stopped the market all year.

The S&P 500 dropped to 9.7% above the 200-dMA and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012).  Other indicators are all neutral of positive.

The most recent BUY signal for the NTSM system was 25 October.  The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

 

 

MY INVESTED POSITION

I am about 30% invested in stocks as of 20 December (S&P 500-1540) because I upped my stock holdings by 10% on the 20^th of December.  Unless I get a SELL signal in the NTSM system, I will continue to income-average (a little each month) into the stocks to get my %-invested up to around 50% (max for me now) unless there is a correction that would allow me to move in sooner and at a higher percentage.  I expect the markets to pullback in the first quarter of 2014, but it remains to be seen whether it will be another small buy-the-dip event or something more. 

(A good rule of thumb for percent invested is to subtract your age from 100 and put that amount into the stock market.  Generally a minimum of 50%-50% stocks and other investment is a reasonable value for the over 50-crowd; that’s my group.  With bond yields rising, keep to the short end of bonds, i.e., less than 10-year maturity or mutual funds that focus on the short end.)

10-Year Interest Rates Above 3%

RALLY: WHAT COULD GO WRONG? (CNBC)
“…interest rates...have climbed despite the Federal Reserve's efforts to keep them exceedingly low…Along with the late-year stock rally came a rise in the 10-year Treasury yield to 3 percent, a number that could serve as an important test for whether the rally will continue.” CNBC video at…
http://www.cnbc.com/id/101298928

MARKET REPORT

Friday, the S&P 500 was down fractionally to1841 (rounded)
VIX rose 1% to 12.46.
10-year Treasury Note closed at 3.01% yield.
(Doug Short has detailed Treasury Yield history at…
http://advisorperspectives.com/dshort/updates/Treasury-Yield-Snapshot.php)

NYSE Volume was about two-thirds that of a regular day.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing rose to 61% at the close Friday.  (A number above 50% for the 10-day average is generally good news for the market.)

New-highs outpaced new-lows Friday, leaving the spread (new-hi minus new-low) at +181 (it was +295 Thursday).  The 10-day moving average of change in the spread remained +41. In other words, over the last 10-days, on average, the spread has increased by 41 each day.

Market internals improved again and remain positive on the market.

 

 

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

The 5-dMA of sentiment remained 82%-bulls in the Rydex/Guggenheim long/short funds I track.  This is an incredibly high value and the 5-day sentiment value was the highest I have ever seen (data back to 2003). High sentiment is a negative indicator for the stock market – but it hasn’t stopped the market all year.

The S&P 500 dropped to 9.8% above the 200-dMA and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012).  Other indicators are all neutral of positive.

The most recent BUY signal for the NTSM system was 25 October.  The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

 

 

MY INVESTED POSITION

I am about 30% invested in stocks as of 20 December (S&P 500-1540) because I upped my stock holdings by 10% on the 20^th.  I will income-average (a little each month) into the stocks to get my %-invested up to around 50% (max for me now) unless there is a correction that would allow me to move in sooner and at a higher percentage.  I expect the markets to pullback in the first quarter of 2014, but it remains to be seen whether it will be another small buy-the-dip event or something more.

Initial Jobless Claims…10-Year Bond at 3%...

INITIAL CLAIMS (Briefing.com)

"The initial claims level dropped to 338,000 for the week ending December 21 from a slightly upwardly revised 380,000 (from 379,000) for the week ending December 14. The Briefing.com consensus expected the initial claims level to fall to 350,000. The continuing claims level increased to 2.923 mln for the week ending December 14 from a downwardly revised 2.877 mln (from 2.884 mln) for the week ending December 7. The consensus expected the continuing claims level to fall to 2.850 mln.”  Longterm charts and analysis from Briefing.com at… http://www.briefing.com/Investor/Calendars/Economic/Releases/claims.htm

10-YEAR TREASURY CLOSES AT 3%

The 10-year Treasury Note closed at a yield of 3% Thursday.  I don’t know if Art Cashin’s (Director of NYSE Floor Trading for UBS & frequent CNBC contributor) prediction of pressure on the stock market if the yield on the 10-year exceeds 3% is correct, but it looks like we won’t have long to wait before we find out.

ADS INDEX (Philly Fed)

The ADS Business Conditions index is looking healthier and is once again above zero.  It has made higher lows and that has broken the troubling trend of lower lows.

Chart from the Philadelphia Fed at…

http://www.philadelphiafed.org/research-and-data/real-time-center/business-conditions-index/

“The Aruoba-Diebold-Scotti business conditions index 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. Both the ADS index and this web page are updated as data on the index's underlying components are released.” – Philly Federal Reserve at…

http://www.philadelphiafed.org/research-and-data/real-time-center/business-conditions-index/

HUSSMAN (Hussman Funds)

“…the most dangerous points to embrace risk are typically when a syndrome of overvalued, overbought, overbullish conditions emerges [as they have now].…We know the risks inherent in present market conditions, and we know how those risks are typically resolved (as they were after 1929, 1972, 1987, 2000 and 2007)…I won’t tell you that this speculative run will end immediately. I can easily say, however, that…I haven’t the faintest inclination to believe that this time is different…The diva is already singing. The only question is precisely how long they hold the note.”  John Hussman, PhD, Hussman Funds Weekly Market Commentary at …
http://www.hussmanfunds.com/wmc/wmc131223.htm

MARKET REPORT

Thursday, the S&P 500 was up 0.5% to1842 (rounded)
VIX fell 1.2% to 12.33.

NYSE Volume was very light (about half that of a regular day).

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing rose to 60% at the close Thursday.  (A number above 50% for the 10-day average is generally good news for the market.)

New-highs outpaced new-lows Thursday, leaving the spread (new-hi minus new-low) at +295 (it was +258 Tuesday).  The 10-day moving average of change in the spread was +41. In other words, over the last 10-days, on average, the spread has increased by 41 each day.

Market internals improved again and remain positive on the market.

 

 

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

SENTIMENT increased yet again (broken record time) and was 84%-bulls at the close Tuesday (the data is released late so I am always a day late on sentiment) and the 5-dMA of sentiment is 81%-bulls in the Rydex/Guggenheim long/short funds I track.  These are incredibly high values and the 5-day sentiment value was the highest I have ever seen (data back to 2003). High sentiment is a negative indicator for the stock market – but it hasn’t stopped the market all year.

The S&P 500 is 10% above the 200-dMA and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012).  Other indicators are all neutral of positive.

The most recent BUY signal for the NTSM system was 25 October.  The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

 

 

MY INVESTED POSITION

I am about 30% invested in stocks as of 20 December (S&P 500-1540) because I upped my stock holdings by 10% on the 20^th.  I will income-average (a little each month) into the stocks to get my %-invested up to around 50% (max for me now) unless there is a correction that would allow me to move in sooner and at a higher percentage.  I expect the markets to pullback in the first quarter of 2014, but it remains to be seen whether it will be another small buy-the-dip event or something more.

Durable Goods Orders…Is Taper the Grinch?

Happy Holidays and belated Happy Hanukkah...

DURABLE GOODS ORDERS

Durable goods orders increased 3.5% in November after declining an upwardly revised 0.7% (from -1.6%) in October. The Briefing.com consensus expected durable goods orders to increase 2.2%...Excluding transportation, durable goods orders rose 1.2% in November, up from a 0.7% gain in October, and easily topped the consensus forecast of a 0.6% gain….A spike in shipments of nondefense capital goods excluding aircraft could be the beginning of a steady surge in business investment.”  Full story at…
http://www.briefing.com/Investor/Calendars/Economic/Releases/durord.htm

WILL TAPER BE THE GRINCH WHO STOLE THE RALLY?

I have on several occasions pointed out that when the Fed tightens, the stock-market usually reacts after a 2^nd or 3^rd Fed tightening.  In those prior instances, the Fed was tightening to slow an overheated economy and to prevent runaway inflation that might result.

Now we have a Fed reducing one of its programs to prevent increasing the Fed balance sheet in an economy that is gaining strength.  Is a QE reduction the same as a typical Fed tightening?

QE raises long term rates and that raises the yield curve on the long end.  Those who watch yield curves for indication of recession point out that a rising yield curve indicates a healthy economy.  An inverted yield curve (short-term rates are higher than long-term rates) indicates an economy in trouble.  While ending QE will slow housing, it actually improves the yield curve (so the argument goes) and the Fed says it isn’t going anywhere. The Fed has pledged to jump back in and provide more QE if it appears that the economy is faltering.  Sounds great right? 

There is always a spoil sport around:

"Investors need to realize that almost 50 percent of the earnings growth in the S&P 500 from 2009 to date came from lower interest rates…That tide has now shifted, and those tailwinds turned into headwinds, making 2014 a tougher year for the equity markets." - Pedro de Noronha, managing partner at hedge fund Noster Capital quoted on CNBC at...
http://www.cnbc.com/id/101288348

Rising rates can’t be good for the stock market, but perhaps the markets will avoid a major crash. What more is there to say? 

MARKET REPORT

Tuesday, the S&P 500 was up 0.3% to1833 (rounded)
VIX fell 3.6% to 12.57.

Volume was very light on the shortened holiday schedule for the NYSE.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing rose to 57% at the close Tuesday.  (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 +258 (it was +311 Monday).  The 10-day moving average of change in the spread was +23. In other words, over the last 10-days, on average, the spread has increased by 23 each day.

Market internals improved again and remain positive on the market.

 

 

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 INDICATORS

-SENTIMENT increased again and was 83%-bulls at the close Monday (the data is released late so I am always a day late on sentiment) and the 5-dMA of sentiment is 79%-bulls in the Rydex/Guggenheim long/short funds I track.  These are incredibly high values and the 5-day sentiment value was the highest I have ever seen (data back to 2003). High sentiment is a negative indicator for the stock market – but it hasn’t stopped the market all year.
-PRICE is positive because the up moves have been bigger than the down moves.
-VOLUME AND VIX are both neutral.

The S&P 500 is 9.5% above the 200-dMA and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012).  Other indicators are all neutral of positive.

The most recent BUY signal for the NTSM system was 25 October.  The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

 

 

MY INVESTED POSITION

I am about 30% invested in stocks as of 20 December (S&P 500 -1540) because I upped my stock holdings by 10% on the 20th.  I will income- average (a little each month) into the stocks to get my %-invested up to around 50% (max for me now) unless there is a correction that would allow me to move in sooner and at a higher percentage.  

Is the Year 2000 Secular Bear Market Over?

SECULAR BEAR MARKET
Definition:
“A market as defined by its overarching, long-term trends. Generally, a secular market refers to trends over a period of five or more years. A secular market may be bullish or bearish, and, in market analysis, takes precedence over opposite, short-term trends that happen within the secular market. For example, the Great Depression in the United States lasted from 1929 until World War II (certainly a bearish secular market). Even though some years saw significant GDP growth (including 14.2% growth in 1936), this did not prevent the secular market from being bearish. Thus, a secular market describes general trends in the market without regard for anomalous trends in the interim.” From the Free Dictionary at...
http://financial-dictionary.thefreedictionary.com/Secular+Market

Market History – Dow Jones Industrial Average (thru 2005)

Chart from Minyanville at…
http://image.minyanville.com/assets/catalog/products/00KAT-Dow100YrsMV.jpg

I have included many posts by numerous market analysts over the years who have suggested that the secular bear market that started in 2000 is not close to an end. 

I tend to agree with that view especially since the Nasdaq Composite is still 20% below its high in the year 2000.  It would be a surprise if the worst financial crisis and recession since the Great Depression was accompanied by a long-term, bear-market no worse than the 14-year 1966-1982 bear.  One must recognize, however, that it has been 13-years since the high in 2000 and the S&P 500 has now climbed 15% above the prior highs.  One can argue the Secular Bear Market is over because the S&P 500 has significantly breached the prior high.  Many do not agree with that view. 

Many analysts (Hussman, Ritholtz, Easterling, etc.) suggest that since the PE10 is at levels seen at the beginning of Bear-markets, not Bull-markets, this bear market is nowhere near over.  Suppose the pundits are wrong? Suppose the bear market ended at the bottom in 2009 (at low PE’s) and we entered another secular bull market that will last for another 10-years?  Suppose the end was confirmed when the old 1560 high was breached? (The S&P is now almost 1820.)

This is becoming a more popular thesis: The Secular bear market is over.  I’m not convinced yet; but let’s not dismiss it entirely.  Here are several articles that argue exactly that point.

MAXIMIZING PROFITS (THE SECULAR BEAR MARKET IS OVER) (Advisor Perspectives)

“The stock market moves in long-term, i.e. "secular", cycles that are either bullish or bearish. Most secular bear markets have lasted between 10-15 years and the U.S. stock market entered a secular bear market in 2000 when the technology bubble burst 13 years ago. Given that we are well within the average timeframe for a new secular bull market to begin, in 2011 I highlighted a number of fundamental reasons why investors should begin preparing for such a shift…”
“…a look at historical secular bull markets and comparing historical relative valuations with bonds and commodities suggests that over time, stocks are likely to prove to be the better investment, which is what legendary value investor Warren Buffett, the "Oracle of Omaha", has said himself. If you don't think I'm right, maybe you're willing to listen to him? Warren Buffett: Stocks Not in a Bubble; Best Place to Be for the Next 20 Years” - Chris Puplava, PFS Group.  Lengthy commentary and Warren Buffet Video at…
http://advisorperspectives.com/dshort/guest/Chris-Puplava-131220-Maximizing-Profits-with-Turning-Points.php

ARE WE AT THE END OF A SECULAR BEAR MARKET? (Fidelity Investments, Jan 2013)

Conclusion:
“All in all, from a technical perspective there is some reason for optimism that we are getting close to the end of this frustrating period of market history. However, one thing gives me pause: each secular bear market I studied included at least three cyclical bear markets with declines of 20% or more. So far in this secular bear market, there have been only two: 2000–2002 and 2007–2009…
…In any case, while it is impossible to predict how markets will behave in the years ahead, this study of market history seems to suggest that maybe the worst is over. If so, it would be important for investors to look closely at their portfolios to make sure they are not too defensively positioned and that their investment allocations are in line with their long-term goals.” Jurien Timmer.  Full commentary from Fidelity at…
https://www.fidelity.com/static/dcle/welcome/documents/Fidelity_End_Secular_Bear_Market_Jan13.pdf

HAS A NEW SECULAR BULL MARKET BEEN BORN? (Fox Business News)

“…it is important to recognize that economic recoveries don't die of old age. No, they typically die from a tightening of monetary policy and/or financial or economic shock. In fact, the last three economic recoveries lasted 7.7, 10.0, and 6.1 years respectively. So, the fact that the current recovery is now entering its fifth year isn't necessarily a bearish omen.

Other reasons to be hopeful that a secular bull has begun include the following:

-Monetary policy will remain accommodative for the foreseeable future (remember the Fed has said it has no plans to sell many of the securities on their balance sheet)

-The economic expansion will likely be longer than normal (Ned Davis Research Group projects the current expansion will run through 2017)

-The credit cycle has turned positive

-The housing market has turned
-The automobile buying cycle has turned
-U.S. Manufacturing is improving…[and more in the original commentary]
…the bottom line is if the market continues to make new highs and those highs are confirmed by global markets, then we may have to be willing to recognize that a new secular bull market is upon us. One can hope, right?”  Fox Business News at...
http://www.foxbusiness.com/news/2013/09/16/has-new-secular-bull-market-been-born/

SO IS THE BEAR MARKET OVER?

I don’t know, but the market has been steadily rising in 2013; VIX has been low; Gold has been crashing; and sentiment has been overly bullish.  That’s what I’d expect at the end of a bear market.  In conclusion, the best answer is: It’s possible. 

DON’T FORGET: Regarding risk, the S&P 500 fell over 20% on Black Monday in October of 1987 (the worst day on record) with little warning and well after the end of the last secular bear-market. Even if this is a new bull, one must set the amount to invest in stocks at a level that allows a sound sleep…or at least one that doesn’t keep you awake at night too often.  One of these days we will see that 20% drop that has been so elusive.  Let’s just hope it doesn’t happen in one day!

MARKET REPORT

Monday, the S&P 500 was up 0.5% to 1828 (rounded)
VIX fell 5% to 13.04.

Volume was down some, but not all that much for the Holiday.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing rose to 54% 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 +311 (it was +242 Friday).  The 10-day moving average of change in the spread was +21. In other words, over the last 10-days, on average, the spread has increased by 21 each day.

Market internals improved again and remain positive on the market.

 

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
Sentiment was 80%-bulls at the close Friday and the 5-dMA of sentiment is 76%-bulls in the Rydex/Guggenheim long/short funds I track.  These are incredibly high values and Friday’s closing value was the highest one-day reading I have seen in 2013. High sentiment is a negative indicator for the stock market – but they haven’t stopped the market all year.

The S&P 500 is 9.3% above the 200-dMA and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012).  Other indicators are all neutral of positive.

The most recent BUY signal for the NTSM system was 25 October.  The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

 

MY INVESTED POSITION

I am about 30% invested in stocks as of 20 December (S&P 500 -1540) because I upped my stock holdings by 10% on the 20th.  I will income- average (a little each month) into the stocks to get my %-invested up to around 50% (max for me now) unless there is a correction sooner that would allow me to move in at a higher percentage. Another pullback is close so we may not have to wait too long.