“Central banks, guardians of the world’s $11 trillion in foreign-exchange reserves, are buying stocks in record amounts as falling bond yields push even risk- averse investors toward equities.
http://www.bloomberg.com/news/2013-04-24/central-banks-load-up-on-equities-as-low-rates-kill-bond-yields.html
CMT: I believe it’s not in the US Fed’s charter to buy stocks, but apparently foreigners have no such restriction. It’s bad enough that now foreigner bankers can affect economies of other countries by buying and selling stocks. More realistically, these foreign governments may try to sell stocks in a hurry during a crisis. Can you say, “Crash!” See further commentary on this subject from Chis Sheridan on Doug Short’s website at…http://www.advisorperspectives.com/dshort/guest/Cris-Sheridan-140627-Central-Banks-Buy-Stocks.php
THE MORE THINGS CHANGE (Lance Roberts)
“Bob Farrell once wrote that "when all experts and
forecasts agree; something else is bound to happen." Today,
that is the case as much as it ever was. Despite rising geopolitical risks,
weak economic data, deteriorating fundamentals and softer internals - the
overwhelming belief is "equities are the only game in town. Of
course, we have seen this mentality many times in past history whether it was
1929, 1987,2000 or 2007. While ever(sic) market peak was different, there (sic)
were all the same.” Commentary and analysis from STA Wealth.com at…http://stawealth.com/?option=com_content&connector=1&view=article&id=2279&Itemid=174
MARKET REPORT
Monday, the S&P 500 was down a point to 1960 (rounded).
VIX rose about 3% to 11.57.
The yield on the 10-year Treasury Note remained 2.59% at the close. The Bond Ghouls are still not convinced that happy days are here again.
CORRECTION WATCH
RSI remained a neutral 65 (70 is overbought). The Percentage of Stocks above their 200-dMA rose to 67% Friday (data is a day late); 61% is the trouble point for that stat. The S&P 500 is 7.3% above the 200-dMA and 10% above the 200-day is the trouble point for that one. Chart wise, the index can still move up. Sentiment also has some head room before it turns negative, although sentiment is rising so it is hard to be sanguine about sentiment. All-in-all though, it still looks like the index has room to move up a bit more, barring unforeseen bad news.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) climbed to 59% at the close Monday. (A number above 50% for the 10-day average is generally good news for the market.)
New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +244. (It was +195 Friday.) The 10-day moving average of change in the spread declined to +10. In other words, over the last 10-days, on average, the spread has INCREASED by 10 each day. The smoothed 10-dMA of up-volume was UP today and the Internals remained positive on the market.
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 for LONG-TERM MONEY remained HOLD Monday. Sentiment rose to 80%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds at the close on Friday (data is a day late). (83% is the negative level for the Sentiment indicator.) This value was 85%-bulls on 19 May. Sentiment, Volume & VIX indicators are all neutral. The Price indicator remains positive because up-moves have been larger than down-moves recently.
MY INVESTED POSITION
I increased my stock allocation to 50% invested in stocks
on 26 March because of the NTSM indicators turned positive 24 Mar at the
close. 50% in stocks is fully invested
for me, given my age (semi-retired) and the risk inherent in today’s stock market.
I am watching closely to see if it is time to reduce my long-term stock
holdings.
--INDIVIDUAL STOCKS--ENSCO (ESV): HOLD (Earnings announce 28 July)
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
Ensco has surpassed the mean and median analyst price targets. As of Friday it is 55.35 so time to get more cautious. There has been insider selling too. That is usually not a big negative (insiders frequently sell to raise cash) but this time it involves several principals rather than just one. Do I hold thru the earnings release? P/E is below 10 so this stock still has limited downside. I am up 9% since I bought the stock in May. I guess this depends on whether this is a long term investment or simply a trade. That 9% dividend looks awfully good.
Price target data from…
http://finance.yahoo.com/q/ao?s=ESV+Analyst+Opinion
