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 2nd or 3rd 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.
