“Federal Reserve Chair Janet Yellen told lawmakers the central bank must press on with record monetary stimulus to combat persistent job-market weakness. ‘There are mixed signals concerning the economy,’ Yellen said in response to questions during testimony to the Senate Banking Committee today. ‘We need to be careful to make sure that the economy is on a solid trajectory before we consider raising interest rates.’”
http://www.bloomberg.com/news/2014-07-15/yellen-says-high-degree-of-easing-needed-amid-job-market-slack.html
ZIRP = Zero Interest Rate Policy. Fed says no rush to tighten so the markets may push higher.
INDUSTRIAL PRODUCTION (WSJ)
“U.S. industrial production increased modestly in June
but at a slower pace than May, the latest sign of steady but sluggish
improvement in consumer and business spending during the second quarter. Industrial production, which measures the output of U.S.
manufacturers, utilities and mines, rose a seasonally adjusted 0.2% in June
from the prior month…” Story at…http://online.wsj.com/articles/industrial-production-increases-modestly-in-june-1405516537
GERMAN ECONOMY SLOWING (Trading Floor)
“We need to congratulate Germany on its World Cup win. It
was a victory for organization and science, but unfortunately the Germany
economy is slowing fast — and too fast for comfort when we look at Eurozone
GDP.” Commentary at…
https://www.tradingfloor.com/posts/germany-may-have-won-the-world-cup-but-its-economy-is-cooling-fast-1076281MARKET REPORT
Wednesday, the S&P 500 was
down about 0.4% to 1981 (rounded).
VIX fell about 8% to 11.00. The yield on the 10-year Treasury Note was down to 2.52% at the close. The Bond Ghouls still aren’t happy. Troubles around the world are also sending buyers to the US and driving interest rates down.
CORRECTION WATCH – CLUES BOTH WAYS
No Correction: The Percentage of Stocks above their
200-dMA dropped to 62% Monday (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 remained 77%-bulls and this indicator will switch to negative at
83%. RSI (SMA/14-day) remained a neutral
62. {70 is overbought}.
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 drifted up to near (or at) the top of the 3-month chart upper trend
line Monday and that could mean the Index is ready for pullback mode. The
Market Internals on the NYSE returned to negative Monday and remained negative
today, Wednesday.
Market Internals got worse Wednesday and the percentage stocks
above their 200-day moving average fell too (at least as of Tuesday). I still think the computers in Wall Street
will push this market a bit higher before a pullback. Numbers are slightly more
negative so I may be wrong. We’ll see.MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 46% at the close Wednesday. (A number below 50% for the 10-day average is generally BAD news for the market.) New-highs outpaced New-lows Wednesday. The spread (new-highs minus new-lows) was +95. (It was +73 Tuesday.) The 10-day moving average of change in the spread fell to minus-25. In other words, over the last 10-days, on average, the spread has DECREASED by 25 each day. The smoothed 10-dMA of up-volume was DOWN today and the Internals remained negative 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 77%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Friday (data is a day late). (83% is the negative level
for the Sentiment indicator.) This value was 85%-bulls on 19 May. Price is
positive because up moves have been higher than down moves. Sentiment, 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 31 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 I rate it hold. There are numerous positive reports though, and with a PE of around 6, downside is limited. Here’s another…
MERILL RECOMMENDS ENSCO (24/7 Wall St)
Ensco (NYSE: ESV) is one of the out-of-favor deepwater drillers…Last year the company took delivery of ENSCO 121, the second of four ultra-premium harsh environment jackup rigs in its ENSCO 120 Series. ENSCO 121 is an enhanced version of Keppel’s proprietary KFELS Super A Class design. The rig has been contracted in the North Sea at a day rate of approximately $230,000. Ensco shareholders are paid an outstanding 5.4% dividend. Merrill Lynch has a $64 target price, while the consensus target is $53.25. Ensco closed Monday at $53.80.” Story at…
http://247wallst.com/investing/2014/07/08/merrill-lynch-picks-10-value-stocks-to-buy-for-the-rest-of-2014/
