The top chart is simply the S&P 500 from 2006-2014. The bottom chart is a relative ranking of Google searches for the term, “Stock Market Correction” fit to the same time scale. Google explains the numbers on the bottom chart as follows: “The numbers on the graph reflect how many searches have been done for a particular term, relative to the total number of searches done on Google over time. They don't represent absolute search volume numbers, because the data is normalized and presented on a scale from 0-100. Each point on the graph is divided by the highest point and multiplied by 100. When we don't have enough data, 0 is shown.” In any event, the relative number of searches for Stock Market Correction is 78 for July. Bulls should worry if it reaches 100.
http://finance.yahoo.com/echarts?s=%5EGSPC+Interactive#symbol=%5EGSPC;range=1d
Bottom Chart from Google Trends at…
http://www.google.com/trends/explore#q=stock%20market%20correction&cmpt=q
BIGGEST RISK TO US STOCK MARKET (CNBC)
“The biggest near-term risk is a sharp re-pricing of U.S.
monetary policy, Michala Marcussen, global head of economics at SocGen, said in
a note dated Sunday…For now, SocGen expects higher wage and inflation data to
lead markets to re-price Federal Reserve action, pushing the U.S. 10-year Treasury yield up to 3.25 percent
by year-end, from around 2.48 percent now.”
Story at CNBC at…http://www.cnbc.com/id/101851496
That’s a worry but it isn’t here yet. See the next headline…
CPI IN LINE – NO INFLATION (Business Insider)
“Core CPI — a measure of inflation that excludes volatile
food and energy prices — rose just 0.1% for the month. This was down from the
0.2% that they grew in the previous month, and also down from the 0.2% that was
expected. Headline CPI rose 0.2%, which was right in line with expectations. For
stock market bulls, this is good news. The muted inflation reading adds no new
pressure on Federal Reserve Board Chair Janet Yellen to increase interest rates
sooner than expected.” Story at…
http://www.businessinsider.com/june-cpi-2014-7EXISTING HOME SALES UP (USA Today)
Existing home sales showed more vigor last month, climbing to their fastest annual pace since October, the National Association of Realtors said Tuesday.
Sales were up
2.6% to a seasonally adjusted annual rate of 5 million. May's rate was revised
up to 4.91 million…"The housing sector ... has shown little recent
progress," Fed Chair Janet Yellen said in testimony before Congress last
week.” Story at…
http://www.usatoday.com/story/money/business/2014/07/22/june-existing-home-sales/12973181/MARKET REPORT
Tuesday, the S&P 500 was up
0.5% to 1984 (rounded).
VIX fell about 8% to 11.84. The yield on the 10-year Treasury Note was down slightly to 2.46% at the close.
CORRECTION WATCH
(1) No Correction: Market Internals are positive. The Percentage of Stocks above their 200-dMA fell to 61% Monday (data is a day late), but it is most likely up today. 61% is the trouble point for this stat so it is on the edge. RSI is only 54 (70 is overbought). The S&P 500 is 7.4% above its 200-dMA. 10% is the level that signifies a correction.
(2) Correction Now:
Statistically, the index is too “quiet” (as it has been
since mid-May) and a pullback is suggested anytime. Chart wise, the index moved
up to near the top of the 3-month chart upper trend line today (Tuesday) and is
making a double top. That could mean the
Index is ready for (or already in) pullback mode.
Overall it appears that the Index can go higher. Correction? Not yet.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) rose to 50.4% at the close Tuesday. (A number above 50% for the 10-day average is
generally GOOD news for the market.) New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +157.
(It was +59 Monday.) The 10-day moving average of change in the spread rose to +12.
In
other words, over the last 10-days, on average, the spread has INCREASED by 12 each
day. The smoothed 10-dMA of up-volume was UP today and the Internals switched
to positive 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 Tuesday. Sentiment fell to 76%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Monday (data is a day late). (83% is the current negative
level for the Sentiment indicator.) This value was 85%-bulls on 19 May. Price, Sentiment,
Volume & VIX indicators are neutra
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): HOLD (Earnings announce 31 July)
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.htmlEnsco has surpassed the mean and median analyst price targets so I rate it hold, but the 6% yield is worth owning.
