“Consumer prices rose in May by the most in more than a year, showing U.S. companies are gaining some pricing power as the economy strengthens…The cost of living increased 0.4 percent, the biggest advance since February 2013, according to Labor Department data…“Inflation in the U.S. is in a sweet spot -- it’s not too hot, it’s not too cold,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC…” Story at….
http://www.bloomberg.com/news/2014-06-17/consumer-prices-in-u-s-increase-by-most-in-more-than-a-year.html
ECONOMISTS: FED TO HIKE RATES 3RD QTR 2015 (Reuters)
“The U.S. economy is on a self-sustaining growth
path that should allow the Federal Reserve to start raising interest rates in
the second half of 2015, according to a Reuters survey of economists.” Story
at…
http://www.reuters.com/article/2014/06/17/us-economy-poll-usa-idUSKBN0ES1RD20140617
STOCKS ABOVE THEIR 200-dMA (Friday’s Data)
This statistic remained 64% on Monday and that’s above the 61% value
that has often led to trouble for the markets in the past. The trend still looks down to me; earlier I
thought it was breaking out, but the trend of lower highs is still there. The
data will be updated with today’s value later tonight. Chart available at…http://www.indexindicators.com/charts/nyse-vs-nyse-stocks-above-200d-sma-params-3y-x-x-x/
MARKET REPORT
Tuesday, the S&P 500 was up about 0.2% to 1942 (rounded).VIX fell about 4.7% to 12.06.
The yield on the 10-year Treasury Note was up slightly to 2.65% at the close.
The Bond Ghouls remain worried.
CORRECTION COMING?
RSI (SMA, 14-day) bounced up to 71 Tuesday again
suggesting an overbought condition and a possible pullback. Overbought can remain for some time though so
the timing of a pullback is certainly not clear, but another clue is the
percent-above-the 200-dMA. When the
S&P 500 index reaches 10%-above the 200dMA it can be trouble for the
markets. That is about 1.5%-2% above the
present value, so this rally is getting long in the tooth. That value would put the Index at its upper trend line so the evidence is there for
at least a 5% pullback, assuming the Index makes it up another 1 or 2%. Whether the S&P 500 will have a
correction greater than 5% remains to be seen.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE
rose to 56% 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. The spread (new-highs minus new-lows) was +123. (It was +143 Monday.) The 10-day moving average of change in the spread rose to 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 was DOWN today and internals remained Neutral on the market. Internals have been improving, but remain just barely 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 for LONG-TERM MONEY remained HOLD Tuesday. Sentiment rose to 78%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds at the close on Monday. (I’m always a day late on this stat because it isn’t available until later tonight.) 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): BUY (Earnings announce 28 July)
The chart looks OK with higher lows and it made a higher high on the 1-month chart so I again rate ESV as BUY. It doesn’t hurt that it was upgraded to Buy on 27 May by The Street.com. For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
ENSCO benefited from an upgrade of Diamond Offshore 29 May by Morgan Stanley. Morgan Stanley upgraded Diamond Offshore to equal weight. They said, “Our Underweight thesis based on significant negative earnings revisions has largely played out. We also believe that the cycle is turning and that floater availability has peaked.”
TESARO (TSRO): BUY
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/gdp-contractsjobless-claims.html[28 May 2014] BMO Capital upgraded Tesaro (NASDAQ: TSRO) from Market Perform to Outperform with a price target of $46.00. Posted at…
http://www.streetinsider.com/Upgrades/BMO+Capital+Upgrades+Tesaro+(TSRO)+to+Outperform/9071511.html
Research has shown that to have a diversified portfolio no one stock should be more than 4% of the portfolio total, or stated another way, if your total portfolio consisted of individual stocks, you would need at least 25-stocks to be “diversified.”
