“At BCA Research last week, analysts in a note posed the question: “Does the recent mini crash in the high-valuation sectors signify the beginning of major trouble on Wall Street?” Their answer: No. “Such localized shakeouts are an inherent part of any bull market.’… Hedge-fund managers tend to pay close attention to the stocks held by rivals…Aware that so many funds held some of the market’s most expensive and speculative shares, there was a scramble to be the first one out the door.” Story at…
http://stream.wsj.com/story/markets/SS-2-5/SS-2-512084/
NEW TECH BUBBLE (CNBC)
“David Einhorn has a clear warning for technology
investors: we're in a bubble. ‘Now there is a clear consensus that we are witnessing
our second tech bubble in 15 years,’ Greenlight Capital said in an investor
letter Tuesday. "What is uncertain is how much further the bubble can
expand, and what might pop it.’" Story at…http://www.cnbc.com/id/101582309
What might pop it? The same thing that popped it last time - the Federal Reserve.
HOUSEHOLD DEBT (Mcclellan)
“Normally it is bullish for stock prices to see household
debt increasing, and bearish to have household debt decreasing. But
occasionally the two can go in opposing directions, which is the condition we
see right now.
Historically when such a divergence has happened, the
stock market eventually realized that it had wandered off track, and it worked
extra hard to get back with the program…It is a bigger and longer divergence
that we are accustomed to seeing in past episodes, such as those labeled in the
chart. The most likely explanation is that the Fed is helping to push up
asset prices, in hopes that such action will eventually help push down
unemployment rates and other indications of economic malady, and that this
action by the Fed is continuing the divergent condition much longer than
normal.” Full commentary at…
http://decisionpoint.com/TAC/MCCLELLAN.html
MARKET REPORT
Tuesday, the S&P 500 was UP about 0.4% to 1880 (rounded).
VIX was DOWN about 0.5% to 13.19.
The yield on the 10-year Treasury Note was up slightly to
2.72% at the close.
There was late day selling today so the Pros aren’t
convinced the downturn is over in spite of comments to the otherwise
above. The S&P 500 is again near the
all-time high and only about 1-1/2% above the 31 December high of 1841 so the
market has gone nowhere in nearly 4-months.
The Index needs to break to all-time highs soon or there will be further
selling that would likely become the long awaited correction.
CORRECTION OVER? - MAYBE
Once again the S&P 500 retreated to its lower trend
line (on 3 February) and simply bounced up from there. I expected a breakdown,
because of all the trouble on the NASDAQ. As it turned out, this was another
case of trade what you see – not what you think, because the NTSM system never
issued a sell. I took a short position
on the rebound, but the market moved up again and I quickly covered. For traders, a failure to break to new highs
may become another short opportunity.MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE increased to 59% at the close. (A number above 50% for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Tuesday. The spread (new-highs minus new-lows was +124. (It was +83 Monday. The 10-day moving average of change in the spread was +12. In other words, over the last 10-days, on average, the spread has INCREASED by 12 each day. The smoothed 10-dMA of up-volume remains UP as of Tuesday. The internals are now positive on the market.
NTSM
The NTSM analytical model for LONG-TERM MONEY remained
HOLD Monday. Sentiment has fallen to 78%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds. The VIX, Price & Volume indicators are all neutral, and have
improved as the Index climbed the last 5-days.
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. I am watching closely to see
if it is time to reduce my long-term stock holdings. 
