“China’s economy slowed this quarter, with industries including retail and mining showing weaker revenue growth while loans through non-traditional channels became more expensive, according to a private survey. Even with the moderation, the labor market and wage growth were little changed from the previous quarter…” Story at…
http://www.bloomberg.com/news/2014-03-20/china-beige-book-says-economy-slowing.html
Not long ago this would have been enough to cause worry in the US markets. Everyone is used to it by now. China is slowing…so what?
IS A CRASH COMING?
Response from a trader board: “How could it be otherwise? The markets are heavily margined, the Fed is tapering, and the economic fundamentals continue to deteriorate. Watch China.”
LEADING INDICATORS UP (Briefing.com)
“[Yesterday] The Conference Board’s Index of Leading Indicators increased 0.5% in February after increasing a downwardly revised 0.1% (from 0.3%) in January. The Briefing.com consensus expected the index to increase 0.3%....In general, the index shows that the economic situation is accelerating.” Story and charts at…
http://www.briefing.com/Investor/Calendars/Economic/Releases/leader.htm
THE TOP WILL BE 1931 (Fortune)
“Tom DeMark, CEO of DeMark Analytics,…[t]he market timing precisionist who famously called the S&P 500's 2011 bottom within a point or so, months before it happened, told Fortune this week that the bull had just a few days left to live…"Its pretty clear that this next rally, the one we're currently in, will be a good top," DeMark says. "And it looks like it's going to be a pretty important top that should last at least three months." During that time, brace for a decline of at least 11%, he adds.” Story at…
http://finance.fortune.cnn.com/2014/03/21/why-the-bull-market-could-end-tomorrow/?iid=HP_LN
SANCTIONS ON RUSSIA (CNN/Money)
“Moscow's MICEX index fell more than 2% -- taking its losses for the year to 14%. The ruble was steady, after dipping early in the day, but has still lost about 10% since the start of the year.” Story at…
http://money.cnn.com/2014/03/21/news/economy/russia-sanctions-impact/index.html?iid=HP_LN
While it is not clear that sanctions caused of the market retreat, it is interesting. I for one won’t be buying any Russian ETF’s. Remember, the Putin regime was caught rigging the first election, so it took 2 to make him supreme leader.
MARKET REPORT
Friday, the S&P 500 was up big in the morning on
extremely high volume, but retreated after 11AM to finish down 0.3% to 1866 (rounded).
There were differing opinions about why the Markets reversed, but there was a
comment by a Fed Governor that reiterated Fed Chairman Yellen’s view that
interest rates would be raised about 6-months after QE ends. Fed short-term interest rates are now
zero. (BTW, Ms. Yellen has requested
that she be referred to as Chairman not Chairwoman.)
VIX rose about 3% to 15.01.
The yield on the 10-year Treasury Note fell to 2.74%.
MARKET INTERNALS (NYSE DATA)
As noted yesterday, Breadth continues to decline with
lower lows and mostly lower highs. The
10-dMA of breadth (measured as percent-advancing) is declining steeply even as
the S&P is generally up since 14 February.
Internals are not confirming this move up and suggest a turn to the
downside. Until the Internals turn and
move up, I will remain at a conservative stock allocation of only 30%.
Volume was more than twice normal on the NYSE. Hard to say whether that was all related to
Options expiration and Index rebalancing.
The high volume sent my volume indicator to the positive side since it
is based on up volume and not a percentage of volume up for the day. (I may
have to change that internal. Today gives an unnaturally positive indication of
buying volume since the up-volume was double normal up-volume, but only 53% of
the total volume.
The 10-day moving average of stocks advancing on the NYSE
increased to 50% at the close. (A number
below 50% for the 10-day average is generally bad news for the market.) New-highs outpaced new-lows Friday. The spread (new-highs minus new-lows was +165. (It was +64 Thursday). The 10-day moving
average of change in the spread was minus 2. In other words, over the last
10-days, on average, the spread has decreased by 2 each day. The smoothed
10-dMA of up-volume was up today, but was helped by the oddly high overall
volume. The internals are neutral on the
market.
NTSM
The NTSM analytical model remained HOLD today. The Price indicator is positive because up
moves have been bigger than down moves recently. Sentiment is negative, but
just barely. Volume and VIX indicators are neutral.
I reduced to 30% invested in stocks because of the NTSM sell signal on 13 March. This is a conservative stock allocation commensurate with the NTSM Sell signal. Leaving 30% invested hedges the bet in case NTSM is wrong – no system is perfect. I will return to 50%-stock allocation if the Market Internals of the NTSM indicators turn positive. Internals could still turn positive soon, but it all depends on the market.
