Factory orders declined 0.5% in May after increasing an
upwardly revised 0.8% (from 0.7%) in April…Elevated levels of backlogs should
keep overall durable goods manufacturing production strong in the face of
uncertain demand.” Commentary and charts
at…
https://www.briefing.com/Investor/Calendars/Economic/Releases/facord.htmPRIVATE SECTOR JOBS UP: ADP (CNBC)
“Private sector job creation surged in June, with
companies adding a much larger than expected 281,000 new positions, according
to a report Wednesday from ADP…Moody's economist Mark Zandi told CNBC. ‘…It was
uniformly strong. Looking at the underlying ADP data, it looks really
good.’" Story at…
http://www.cnbc.com/id/101806968
DOW 20,000 BY YEAR END?! (CNBC)
“Uber bull Jeremy Siegel said Wednesday that he expected
the market's stampede to continue, easily pushing the Dow Jones Industrial Average topping 18,000 by
year end…"I think we're going to get to 18 and above. Could it go to 19,
20? It could," he said. "I'm not going to say that's the likely event,
but so many people have missed this bull market that they start saying, 'Hey,
you know, this is my last chance.'" Story at…http://www.cnbc.com/id/101807724
MARKET REPORT
Wednesday, the S&P 500 was
up 0.1% to 1975 (rounded).VIX fell about 2% to 10.88.
The yield on the 10-year Treasury Note was up to 2.62% at the close. The Bond Ghouls are still not convinced that happy days are here again.
CORRECTION WATCH – CLUES BOTH WAYS
No Correction: The Percentage of Stocks above their
200-dMA rose to 70% Monday (data is a day late); 61% is the trouble point for
that stat. The S&P 500 is 8% above
the 200-dMA and 10% above the 200-day is the trouble point for that one.
Sentiment is 80%-bulls and this indicator will switch to negative at 83%. VIX was falling today, so the options boys
didn’t seem worried.
Correction Now: RSI jumped to an Overbought 80. (70 is
overbought). Declining stocks outpaced advancers by a wide margin Wednesday and that may
indicate a turn down. Chart wise, the index is at the top of the 3-month chart upper
trend line and that is often a point where there are reversals. It is also near
the top of the 1-year chart upper trend line. It could continue to crawl upward
along that trend line so further advance can’t be ruled out. Tuesday was a Statistically-Significant, up-day
and that suggested a reversal down Wednesday, but that may still happen
Thursday. Today was barely up. Statistically, the index is too “quiet” (as
it has been since mid-May) and a pullback is suggested by that stat too.
While there are some indications of a pullback now, I’d
like to see the Index get a bit higher before I’d take a short position. The shorts have been killed in this market.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) fell 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 +156.
(It was +340 Tuesday.) The 10-day moving average of change in the spread fell
to minus-4. In other words, over the last 10-days, on
average, the spread has DECREASED by 4 each day. The smoothed 10-dMA of up-volume
was DOWN today and the Internals turned 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 Wednesday. Sentiment remained 80%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Tuesday (data is a day late). (83% is the negative level
for the Sentiment indicator.) 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): HOLD (Earnings announce 28 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. As of Monday it is 55.57 so time to get more cautious.
