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…
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…
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 20th
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.)
