”Retail sales rose less than forecast in May as American consumers took a
respite following a three-month surge in shopping that has underpinned economic
growth…Six of 13 major retail categories showed gains last month, indicating
the advance wasn’t broad-based, today’s Commerce Department report showed. The
increase was paced by a pickup in demand at auto dealers and service stations.
Excluding those two categories, sales were unchanged after a 0.3 percent
increase in April that was previously estimated as a 0.1 percent drop.” Story
at…
http://www.bloomberg.com/news/2014-06-12/retail-sales-rise-less-than-forecast-as-americans-take-respite.html
CRUDE OIL SURGES ON IRAQ VOLENCE (CNBC)
Sectarian violence in Iraq sent oil surging on Thursday,
propelling both Brent and West Texas Intermediate up about two percent intraday
amid growing concerns about a threat to global supply…oil prices soared as open
warfare between rebel forces…Iraq is a member of OPEC, second only to Saudi
Arabia as one of the world's largest producers of crude.” Story at…http://www.cnbc.com/id/101752227
MARKET REPORT
Thursday, the S&P 500 was down 0.7% to 1930 (rounded).
VIX rose about 8% to 12.56. The yield on the 10-year Treasury Note was down slightly to 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 72 Thursday
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 52% at the close Thursday. (A number
above 50% for the 10-day average is generally good news for the market.) New-highs outpaced New-lows Thursday. The spread (new-highs minus new-lows) was +86. (It was +85 Wednesday.) The 10-day moving average of change in the spread was 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 Thursday. Sentiment rose to 75%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Tuesday. This value was 85%-bulls on 19 May. Sentiment,
Price, & Volume indicators all remain neutral. The VIX indicator is positive because the VIX
is falling. VIX is actually sending a
mixed signal: falling VIX is good, but the lack of volatility (and fear) is a
negative on the market in the short term.
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.”
