MARKET REPORT
Tuesday, the S&P 500 was up 0.7% to 1973 (rounded).
VIX fell about 4% to 11.15.
The yield on the 10-year Treasury Note fell slightly to 2.57%
at the close. The Bond Ghouls are still
not convinced that happy days are here again.
CORRECTION WATCH – CLUES BOTH WAYS
-No Correction: RSI remained neutral at 67 (70 is
overbought). The Percentage of Stocks above their 200-dMA rose to 67% 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 81%-bulls
and this indicator will switch to negative at 83%. VIX was falling today, so the options boys
didn’t seem worried.
-Correction Now: 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. Today was a Statistically-Significant,
up-day and that suggests a reversal down tomorrow. Statistically, the index is too “quiet” and a
pullback is suggested by that stat too.
While there are some indications of a pullback now, but 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) climbed to 59% 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 +340.
(It was +244 Monday.) The 10-day moving average of change in the spread rose to
+22. In other words, over the last 10-days, on
average, the spread has INCREASED by 22 each day. The smoothed 10-dMA of up-volume
was UP today and the Internals remained 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 rose to 81%-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 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:
Ensco has surpassed the mean and median analyst price targets. As of Monday
it is 55.57 so time to get more cautious.
