http://stockcharts.com/articles/decisionpoint/
Here’s some info on bond funds…
BOND ETF’s (CNBC)
“iShares Core Aggregate Bond (AGG), which has $17 billion
in assets…is well-diversified across U.S. Treasurys, U.S. mortgages and agency
bonds, as well as investment grade corporate bonds…AGG has a 2.0 percent 30-day
SEC yield and the expense ratio is just 0.08 percent, well below the 0.85
percent for the average Lipper core bond mutual fund. With an average duration
of 5.2 years, investors should expect AGG's price to decline by 5.2 percent if
interest rates were to increase by 100 basis points…Vanguard Long-Term Bond
(BLV) has a 4 percent yield, but has duration of 14 years, suggesting it takes
on significantly greater interest rate risk…iShares iBoxx High Yield Bond (HYG)
that has a 0.50 percent expense ratio and holds mostly bonds rated BB and B. In
exchange for their elevated credit risk, investors receive a 4.2 percent
yield.” More at…
http://www.cnbc.com/id/101773499
MOST HEALTH INSURANCE COSTS TO RISE (WSJ)
“…the largest health insurer(s) [are] proposing to
increase premiums between 8.5% and 22.8% for next year, according to a Wall
Street Journal review of the filings…At the same time, insurers with the
smallest enrollments are proposing to cut rates so they can lure customers as
the cheapest plans in their markets.” Story at…http://online.wsj.com/articles/premiums-rise-at-big-insurers-fall-at-small-rivals-under-health-law-1403135040
MARKET REPORT
Friday, the S&P 500 was up about 0.2% to 1963 (rounded).
VIX rose about 2% to 10.85. 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 2.61%
at the close.
RSI
RSI (SMA, 14-day) remained 73 Friday suggesting an
overbought condition and a possible pullback.
Overbought can remain for some time though (it’s been overbought for
more than 2-weeks), so the timing of a pullback is certainly not clear. If RSI
isn’t enough evidence of an overbought condition, there still have been only
5-down days in the past 20-days.
% ABOVE THE 200-dMA
When the S&P 500 index reaches 10%-above the 200dMA
it can be trouble for the markets. The
index is now 8% above the 200-dMA so no problem yet, but it’s creeping up. The
upper trend line is around 1975 – 2000 so the evidence is there for at least a
5% pullback, if the Index gets to the upper trend line.
PULLBACK/CORRECTION?
Not yet.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) fell to 54% at the close Friday. (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 +294.
(It was +248 Thursday.) The 10-day moving average of change in the spread fell
to minus 5. In other words, over the last 10-days, on average,
the spread has DECREASED by 5 each day. The smoothed 10-dMA of up-volume was UP
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 Friday. Sentiment fell to 73%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds at the close on Thursday. 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.htmlENSCO 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.”
