Friday, April 4, 2014

Payroll Report Shows Employment Up…Another Top Call for the Stock Market

PAYROLLS UP (Bloomberg)
“Payrolls rose 192,000 after a 197,000 gain in February that was larger than first estimated, the Labor Department reported today…“This is a very good report,” said Nariman Behravesh, chief economist at IHS Inc. in Lexington, Massachusetts, and the top payrolls forecaster in the last two years, according to data compiled by Bloomberg. ‘It looks like we’re back on track.’” Full story at…
http://www.bloomberg.com/news/2014-04-04/payrolls-in-u-s-rose-192-000-in-march-unemployment-at-6-7-.html

SOTHEBY’S: THE BEST INDICATOR (CNBC)
“Need proof of a speculative bubble? Closely watched hedge fund manager Jim Chanos says he has the best barometer for gauging where 1 percenters are putting their money, given the Federal Reserve's easy money policies that have been fueling their portfolios to record highs. During an interview Thursday on CNBC's "Squawk Box," he pointed to the stock chart of Sotheby's. "That's what people are buying," Chanos said. The chart shows that shares of Sotheby's have peaked before every major financial bubble since 1987, starting with the leveraged-buyout spree that fueled the stock market before the Black Monday crash that year.” Full story and video at…



MARKET REPORT
Friday, the S&P 500 fell 1.3% to 1865 (rounded).
VIX was up about 4% to 13.96.
As expected when stocks are getting crushed, the yield on the 10-year Treasury Note moved down to 2.72%.

Today was a statistically significant down-day since it exceeded my price and volume statistical parameters.  This would usually (about 62% of the time) be followed by an up-day Monday.  There wasn’t enough selling to indicate panic.  I wouldn’t be at all surprised to see the markets up on Monday.  There are arguments that support more selling too.

The Friday selloff could indicate a top since the S&P 500 not managed to get much more than 2% above its close of 1848 on the 31 December over the last 3-months, but you could have made that same argument 6-months ago.  It is clear that the high fliers with low earnings are now being punished.    

MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE fell to 54% at the close.  (A number above 50% for the 10-day average is generally good news for the market.)  New-highs outpaced new-lows Friday.  The spread (new-highs minus new-lows was +156.  (It was +142 Thursday). The 10-day moving average of change in the spread was minus-1.  In other words, over the last 10-days, on average, the spread has decreased by 1 each day. The smoothed 10-dMA of up-volume fell today.  The internals are neutral.

Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are usually right, but they are often late.  They are most useful when they diverge from the Index.  In 2013, using these internals alone would have made a 16% return vs. 30% for the S&P 500 (in on Positive out on Negative – no shorting).  Of course, few trend-following systems will do well in an extreme low-volatility, straight-up year like 2013.
 
NTSM
The NTSM analytical model remained HOLD Friday.  Sentiment has popped up to a screaming high 81%-bulls and this indicator is now negative. That’s only one indicator so it won’t affect the overall NTSM analysis unless other indicators also switch. The VIX, Price & Volume indicators are neutral.


MY INVESTED POSITION
I increased my stock allocation to 50% invested in stocks on 26 March because of the NTSM indicators turned positive Monday (24 Mar) at the close.   Further the 5-10-20 Timer was positive along with market internals on 26 March as they are today, 28 March.  50% is fully invested for me at this time.
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