“Federal Reserve officials indicated at their June meeting that the monthly bond-buying program could end sooner rather than later—with an October exit growing increasingly likely. ‘Participants generally agreed that if incoming information continued to support its expectation of improvement in labor market conditions and a return of inflation toward its longer-run objective, it would be appropriate to complete asset purchases with a $15 billion reduction in the pace of purchases in order to avoid having the small, remaining level of purchases receive undue focus among investors,’ the minutes stated.” Story and video at…
http://www.cnbc.com/id/101823480
CMT: This “news” has been widely telegraphed by the FED so expect little impact in the short term. In the long term investors will be more nervous. Stocks fell at first, but quickly recovered were a little higher after the minutes were released at 2PM.
WHAT HAPPENS WHEN QE ENDS? ANS: WHAT HAPPENED IN THE PAST? (Advisor Perspectives)
Chart from Adam Feik guest post at Advisor
Perspectives. See commentary at Advisor
Perspectives at…MARKET REPORT
Wednesday, the S&P 500 was down 0.5% to 1973 (rounded).
VIX rose about 3% to 11.61 at 4:01 PM.
The yield on the 10-year Treasury Note was down to 2.55%
at the close. The Bond Ghouls still
aren’t happy.
CORRECTION WATCH – CLUES BOTH WAYS
No Correction: The Market Internals on the NYSE improved
today. The Percentage of Stocks above
their 200-dMA was 66% Tuesday (data is a day late); 61% is the trouble point
for that stat. The S&P 500 is 7.6%
above the 200-dMA and 10% above the 200-day is the trouble point for that one.
Sentiment is 78%-bulls and this indicator will switch to negative at 83%. RSI declined to a neutral 59. {70 is
overbought}. Chart wise, the index has
pulled back from the top of the 3-month chart upper trend line and that is
often a point where there are reversals. It is near the top of the 1-year chart
upper trend line, but has room for advance. Sentiment has been falling, albeit,
slowly, and this usually means there is room for advance.
Correction Now: Statistically, the index is too “quiet”
(as it has been since mid-May) and a pullback is suggested anytime.
I commented yesterday that the next day or two will give
a pretty good indication whether there will be a pullback or not. Today, it doesn’t look like a correction has
started: internals improved. In the
absence of bad news, the next pullback is likely to be valuation driven and the
Index will need to be at least 10% above its 200-dMA.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) rose to 54% 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 +76.
(It was +39 Tuesday.) The 10-day moving average of change in the spread rose
slightly to minus-8. In other words, over the last 10-days, on
average, the spread has DECREASED by 8 each day. The smoothed 10-dMA of up-volume
was DOWN today and the Internals remained neutral on the market. Only the 10-dMA of percentage of stocks
advancing kept the internals from flashing a negative, but Internals improved
today.
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 slipped to 79%-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, Price, Volume & VIX indicators are all neutral.
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.html
Ensco has surpassed the mean and median analyst price targets so time to get more cautious.
WHY ENSCO IS A GREAT DIVIDEND BUY (Seeking Alpha)
“Ensco will benefit from the rising prices of oil and natural gas…Ensco is increasing its ultra-deepwater rigs fleet; three new drillships will be delivered this year and in 2015…Ensco’s dividend yield is very high at 5.48%, and the annual rate of dividend growth over the past three years was also very high at 27.7%...Ensco is ranked second among all S&P 500 energy stocks according to the powerful ranking system "All-Stars: Buffett."
