Monday, the S&P 500 was up about 0.3% to 1937 (rounded).
VIX fell about 10% to 1.23.
The yield on the 10-year Treasury Note was unchanged at 2.42% at the close; the bond Ghouls remain worried.
STOCKS ABOVE THEIR 200 DAY MOVING AVERAGE
The percent of stocks on the NYSE above their 200-dMA
rose slightly to 52% Friday (data is a day late). 61% is the trouble point for this stat.
RSI
RSI was neutral at 33 as of Monday. Oversold is below 30.
BOUNCE OR CORRECTION OVER?
The S&P 500 stopped its decline on the lower trend
line of the upwardly trending channel last week. The Chart suggests the correction is over. Internals have improved, but breadth hasn’t
yet cracked the 50%-advancing line, so the Jury is still out on whether the
pullback will continue.
Saw this story on valuation…
STOCKS MORE OVERVALUED THAN 2000 (Yahoo Finance)
[Regarding overvaluation] “It implies long term returns
from here are not going to be great…the bearish case on stocks are stronger
than the bullish arguments.” - MarketWatch columnist Brett Arends. Video at…
http://finance.yahoo.com/video/stocks-more-expensive-now-dot-143143452.htmlMARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 47% at the close Monday. (A number below 50% for the 10-day average is generally BAD news for the market. The average in a normally rising market is 53%.
In a reversal New-highs still outpaced New-lows Monday. The spread (new-highs minus new-lows) was +59.
(It was minus-18 Friday.) The 10-day moving average of change in the spread was
+3. In other words, over the last 10-days, on average, the spread has INCREASED
by 3 each day. This is a nice reversal,
but not big enough to say the pullback is over.
Internals improved today, but remained neutral on the
market because breadth (I measure as %-advancing) was still below 50% over the
past 10-days.
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 switched to
HOLD Monday. All Indicators are now neutral. Perhaps the NTSM system has issued another
false alarm. The last one was in March
of 2014. Investors have become nervous at the new highs so another false alarm
is not out of the question. I’ll see if
I can get a better answer over the next couple of days.
MY INVESTED POSITION
I reduced my investment in stocks to 30% on 1 August because
of the NTSM indicators turned negative at the close on 31 July. 30% invested protects the portfolio. If there
is a 50% crash I would only lose 15% of the portfolio value. At the same time, if the market goes up, I
will make some gains. No system is perfect and the NTSM system has
underperformed a buy and hold strategy in the Fed driven market currently in
place.
--INDIVIDUAL STOCKS FROM A VALUE
HOUND--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
