“U.S. consumer sentiment fell in June as views by consumers with the lowest incomes soured, a survey released on Friday showed. The Thomson Reuters/University of Michigan's preliminary June reading on the overall index on consumer sentiment came in at 81.2, down from 81.9 the month before… ‘The change from May was too small to indicate a significant loss in sentiment,’ survey director Richard Curtin said in a statement.” Story at…
http://www.reuters.com/article/2014/06/13/us-usa-economy-sentiment-idUSKBN0EO1GU20140613
PPI (Briefing.com)
“…The Producer Price Index for May declined 0.2%. Excluding
food and energy, core PPI declined 0.1%... the recent spike in oil prices could
make things look less benign on the inflation front in coming months if they
are sustained.” Short commentary and charts at…https://www.briefing.com/Investor/Calendars/Economic/Releases/ppi.htm
EVIDENCE OF A SHORT TERM TOP (d.Short.com)
“…Given most of my timing indicators are still at
elevated levels we are likely to see weakness heading into next week’s June
FOMC meeting. Noting the above, I would not expect a sharp selloff given the
lack of stress seen in the credit markets and strength in the economy. There is
some real momentum building in the small business segment of the economy as
small business optimism surges to multi-year highs, which bodes well for the
consumer and thus consumer spending.” – Chris Puplava posted at Advisor
perspectives at…http://www.advisorperspectives.com/dshort/guest/Chris-Puplava-140613-Market-Update.php
MARKETS WILL GO UP UNTIL THERE IS A RECESSION? NO!
I keep hearing commentary that there is no recession in sight and,
therefore, the stock market is not at risk. While I agree with the “no
recession” call, that really says little about the potential for a stock market
drop. Think about 2000 and the dot.com bubble.
That failure of the stock market preceded the recession and that process
is likely to repeat this time around.
The market will be in trouble when the Fed is raising short-term
interest rates. The “3-steps and a
stumble” rule is likely to prevail.
After the 3rd hike – look out. In the meantime, I still think there will be
a short term 10-15% correction and a climb back to the old highs before the
serious bears (Hussman, Faber, etc.) are finally proven correct. That is likely as QE continues. MARKET REPORT
Friday, the S&P 500 was up 0.3% to 1936 (rounded).
VIX fell about 2% to 12.26.
The yield on the 10-year Treasury Note remained unchanged at 2.60% at the close.
The Bond Ghouls remain worried.
S&P 500 RELATIVE STRENGTH INDEX (RSI)
RSI (SMA, 14-day) was still high at 71 Friday suggesting an overbought condition. Overbought conditions can persist, but many put great faith in RSI and it is a warning that conditions are ripe for a pullback.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE
was up to 53% 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 +78.
(It was +86 Thursday.) The 10-day moving average of change in the spread remained
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 and 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 rose to 76%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds at the close on Thursday. (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 switched to 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
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.”
