MARKET REPORT
Wednesday, the S&P 500 was up 0.5% to 1960 (rounded).
VIX fell about 4.5% to 11.59.
The yield on the 10-year Treasury Note fell to 2.56% at the close. The Bond Ghouls are still not convinced that happy days are here again.
CORRECTION ALERT
RSI rose to a neutral 65. The Percentage of Stocks above their 200-dMA was 65% Tuesday; 61% is the trouble point for that stat. The S&P 500 is 7.5% above the 200-dMA and 10% above the 200-day is the trouble point for that one. Chart wise, the index can still move up. Sentiment also has some head room before it turns negative, although sentiment is so high it is hard to be sanguine about sentiment. All-in-all though, it still looks like the index has room to move up a bit further.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 55% at the close Wednesday. (A number above 50% for the 10-day average is generally good news for the market.)
New-highs outpaced New-lows Wednesday. The spread (new-highs minus new-lows) was +119.
(It was +154 Tuesday.) The 10-day moving average of change in the spread remained
+3. In other words, over the last 10-days, on
average, the spread has INCREASED by 3 each day. The smoothed 10-dMA of up-volume
was UP today, but Internals remained NEUTRAL on the market because the new-hi/new-low
spread is slipping.
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 Wednesday. Sentiment rose to 74%-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, 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
TESARO (TSRO): SELL
I gave my reason in the 24 June blog at…
http://navigatethestockmarket.blogspot.com/2014/06/new-home-sales-upplosser-fed-might.html
