“Sales of previously owned homes jumped 4.9% from April to a seasonally adjusted annual rate of 4.89 million in May, the National Assn. of Realtors said Monday. It was the largest increase since August 2011 and beat expectations.” Story at…
http://www.latimes.com/business/la-fi-re-existing-home-sales-20140623-story.html
EURO PMI INDICATES SLOWER GROWTH (Bloomberg)
“Euro-area
manufacturing and services activity weakened in June amid a further slowdown in
France’s economy, underscoring the fragility of
the recovery in the 18-nation region. A Purchasing Managers Index for both
industries slipped to 52.8 in June from 53.5, Markit Economics said today.” Story at…http://www.bloomberg.com/news/2014-06-23/euro-region-survey-shows-weakening-as-french-woes-intensify.html
THE MOST EXTREME MARKET PEAKS IN HISTORY (Hussman Funds)
“Taken individually, we can find points in history where
either market valuations, or bullish sentiment, or overbought conditions have
been more extreme at one time or another than they are at present. Taken
together, a syndrome
of overvalued, overbought, overbullish conditions has uniquely identified the
most extreme market peaks in history, and we’ve never observed this entire
syndrome extended to more persistent and uncorrected excesses than we have in
the present cycle…we estimate that equities, corporate bonds, and junk debt are
all uncompetitive with a zero risk-free return. We’re quite aware that in the
short-run, they could become even less so as a result of even higher prices…We
don’t rule out a retreat to historically undervalued levels at some near or
distant point in the future, but very constructive investment opportunities in
the interim would not require the market to retreat anywhere near historical
valuation norms (which are presently more than 50% below current market
levels). Meanwhile, we expect that the completion of the present cycle will be
a welcome reminder that patient, informed discipline is as vital as ever.” –
John Hussman, PhD, Weekly Market Commentary at…
http://www.hussmanfunds.com/wmc/wmc140623.htm
MARKET REPORT
Monday, the S&P 500 was basically unchanged at 1963 (rounded).
VIX rose about 1.2% to 10.98. This is a level that has preceded pullbacks in the Index in 2013 and 2014.
The yield on the 10-year Treasury Note rose slightly to 2.62%
at the close.
CORRECTION ALERT: NOT YET
-Absent any news, I don’t’ think there will be a
correction or pullback for a bit longer.-Sentiment is slowly falling
-VIX is generally contained.
-The S&P 500 is about 8% above its 200-day moving average while 10% has been the trouble point over the last year or two.
A pullback is getting closer however:
-RSI is 74 and that’s overbought.-There still have only been 5-down days in the last month of trading.
-My daily statistical analysis indicates little volatility is present in Price movement (i.e., how much price change occurs on a given day compared to an average). A slow grind up like the Index is now doing is often a precursor to a pullback. Like RSI, it can remain cautionary for some time.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) fell to 53% 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 +218.
(It was +294 Friday.) The 10-day moving average of change in the spread fell to
minus 7. In other words, over the last 10-days, on average,
the spread has DECREASED by 7 each day. The smoothed 10-dMA of up-volume was DOWN
today. Internals remained NEUTRAL 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 fell to 72%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds at the close on Friday. 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.
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
3-DRILLERS BUY ON ANY WEAKNESS (SeekingAlpha, 20 June 14)
“Seadrill Ltd., Transocean Ltd., and Ensco Plc. are three popular top-tier offshore drillers that seem to represent the entire industry, from the floaters to the jackups. The offshore drilling sector is about to turn around and show a bullish outlook again. Many important contracts have been signed recently at high day rates. These three stocks should be accumulated on any weakness now.” Commentary at…
http://seekingalpha.com/article/2277323-seadrill-transocean-and-ensco-3-offshore-drillers-ready-for-a-rebound
Ensco is up 9% since I recommended it on 6 May.
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.”
