MARKET REPORT
Friday, the S&P 500 was unchanged
at 1955 (rounded). VIX was UP about 6% to 13.15.
The yield on the 10-year Treasury Note collapsed to 2.34% at the close; the bond Ghouls are more worried.
STOCKS ABOVE THEIR 200 DAY MOVING AVERAGE
The percent of stocks on the NYSE above their 200-dMA
rose slightly to 54% Thursday (data is a day late). 61% is the trouble point for this stat. 61%
is the mean and I think that is over the past 3-years. So if the mean is 61% in a normally rising
market, a value of 54% is not a good number.
If it drops below 50% it will confirm a correction well underway. Chart at…http://www.indexindicators.com/charts/nyse-vs-nyse-stocks-above-200d-sma-params-3y-x-x-x/
RSI
RSI was neutral at 42 as of Thursday. Oversold is below
30.
BOUNCE OR CORRECTION OVER?
Was the rise since 7 August just a Fibonacci
retracement? I have never been too much
of a Fibonacci person. That’s the theory
that market moves can be predicted by the Fibonacci series. While many believe in this religiously, it
always seemed to me that retracements to the upside were likely to fail around
the 50% point, if there was a failure. The 62% Fibonacci-retracement level from
the recent low of 7 August is 1958. Friday’s
close of 1955 was pretty close to that Fibonacci value as was Thursday’s close.
Perhaps Mr. Fibonacci is playing a part? Enough people seem to follow this
stuff so it may be a self-fulfilling prophesy.Friday’s volume was about 20% above the average daily volume over the past month. When a large number of stocks change hands with little change in price, some suggest that it’s due to “distribution”. Simply put, the smart money is selling and the dumb money is buying. I don’t know. There has been late day buying for a while and looks to me like the smart money is buying, but here’s what Joshua Hayes said:
“For the second day in a row the Dow Jones Industrial Average, S&P 500, and the NYSE Composite posted another day of distribution. It is an ominous sign for a newly developed rally to post back to back days of distribution after a follow-through day.” Commentary at Seeking Alpha at…
http://seekingalpha.com/instablog/195752-joshua-hayes/1316861-nyse-posts-second-day-of-distribution-as-reid-signals-congress-still-cant-get-its-act-together
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing
(NYSE) was up to 58% at the close Friday.
(A number above 50% for the 10-day average is generally GOOD news for
the market. The average in a normally
rising market is 53%.) New-highs still outpaced New-lows Friday. The spread (new-highs minus new-lows) was +72.
(It was +56 Thursday) The 10-day moving average of change in the spread was +16.
In other words, over the last 10-days, on average, the spread has INCREASED by
16 each day.Internals remain 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 Friday. All Indicators are now neutral, but the VIX indicator is climbing
again and that should be worrisome to the bulls. Market Internals are positive, but the
5-10-20 Timer remains negative. If both
are positive, that would be a definite buy signal. Looking at the 5-10-20 Timer, it appears that
it will be some time before it signals a Buy and I don’t want to wait too
long. I said yesterday: I will wait for the S&P 500 to close above Friday’s
value of 1955 and re-evaluate then. That’s still true. If it can close
significantly above 1955, I’ll be a buyer.
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
