“…unless we expect deflation (and right now I don't), there is every reason to view the long leading indicators, under either method, as being in agreement that the economic expansion will continue through the end of 2014.
On the other hand, the deceleration of most of the indicators, and also the deceleration of the WLI, cause me to believe that the second half will be considerably weaker than the first half. If the long leading indicators turn negative quickly enough and significantly enough, it is possible that we could enter into a recession in Q4. Before ruling that out, I want to see how 2013 Q4 corporate profits play out, as well as the next couple of months of housing and money supply data. But subject to that caveat – that there are mounting reasons to be concerned about 2015 – I look for continued positive readings in employment, wages, industrial production, and GDP through the year.” Lengthy analysis with numerous charts and thoughtful analysis at Advisor Perspectives (dShort.com) at…
http://advisorperspectives.com/dshort/guest/NDD-140106-2014-Forecast.php
MORE FROM JOHN HUSSMAN, PhD (Hussman Funds)
“We observe warnings from nearly every variant of
overvalued, overbought, overbullish, rising-yield conditions that have
accurately warned investors of oncoming market losses in a century of data, not
to mention in real-time in
2000 and 2007…
…As one of many historically effective variants of this
syndrome, define “overvalued” as a Shiller P/E anything higher than 18 (given
an actual multiple of 25.7 here, any objections to the Shiller metric are
quibbles); define “overbought” as the S&P 500 at least 8% over its 200-day
average, and just to be extreme about it – within 2% of a 5-year high; define
“overbullish” as a 2-week average of bulls greater than 54% with bears less
than half that level – below 27%; define rising yields as a 10-year Treasury
yield higher than it was 6 months earlier.”
One wonders how much longer the FED can keep propping up the markets. The FED gets the credit for near record stock market returns in 2013. The FED has vowed to support the economy to the fullest and will even reverse tapering of QE if necessary. On the other hand, I doubt that even the FED could prop up the markets forever unless the economy begins to improve at a faster rate.
TREASURIES HIT 3% - THE END OF THE STOCK RALLY? (Michael
Lombardi)
This was a quick but insightful read. Here’s the conclusion:
“Going into 2014…I am worried about key stock indices
like the S&P 500. The easy money policies of the Federal Reserve have been
largely responsible for 2013's rally in the key stock indices. But
inadvertently, the Fed has created a new stock market bubble with its
ridiculous, long-running money printing programs. Dear reader, the higher key
stock indices go, the bigger the fall is going to be and the bigger the damage
will be to consumer confidence and spending.” – Michael Lombardi. Full commentary and analysis posted at
Advisor Perspectives, dShort.com at…
NTSM PERFORMANCE UPDATE
I’ve updated the performance page on the right of the
NTSM Blog under Pages, titled “Performance of the Navigate the Stock Market
System” thru 2013.
MARKET REPORT
Tuesday, the S&P 500 was up 0.6% to 1838 (rounded).
VIX was down about 5% to 12.92.
The 10-day moving average of stocks advancing was 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 +125 (it was +105 Monday). The 10-day moving average of change in the
spread fell to minus 12. In other words, over the last 10-days, on average, the
spread has decreased by12 each day.
Market internals remained NEUTRAL on the market.
The S&P 500 was 10.1% above the 200-dMA at the close
Tuesday a week ago and a value of 10% has led to small pullbacks in 2013 (and
corrections in 2011 and 2012). That stat
was 9.1% above the 200-dMA Tuesday (today).
The Index is 2.4% above the 50-dMA.
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.
THE NTSM ANALYSIS IS HOLD.
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. Since that is my expectation, I have not upped my invested
percentage in one move as I normally would.
(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.
