Thursday, the S&P 500 was
UP about 0.4% to 1955 (rounded).
VIX fell about 4% to 12.42. The yield on the 10-year Treasury Note was down slightly to 2.40% 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 53% Wednesday (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 53% is a worrisome 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 Wednesday. Oversold is below
30.
BOUNCE OR CORRECTION OVER?
At this point is looks like the recent trouble in the
stock market has been another false alarm, much like last December and January. VIX has fallen back to where it was the day
after the Index made its top on 24 July. Market Internals have improved and
continue to look better.
CNBC had a piece titled, “Who is right: Bond traders or
stock traders?” That’s the $64-question. The Bond market is signaling trouble while
the stock market bounced from the lower trend line and went up in a normal
pattern of up and down, with some near panic on Wall Street as the market
declined. The panic is over. Here is an
excerpt from the piece…"I think that the market is saying awful news is okay because it gives us our juice [from the Fed] for longer. We kind of hoped we'd start to trade on earnings trends," said Gina Martin Adams, institutional equity strategist at Wells Fargo Securities. "But earnings don't matter. In earnings season, stocks fell and it was the best earnings season we've seen in years." Story at…
http://www.cnbc.com/id/101921438
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) shot up to 57% at the close Thursday. (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 Thursday. The spread (new-highs minus new-lows) was +56.
(It was +45 Wednesday) The 10-day moving average of change in the spread was +13.
In other words, over the last 10-days, on average, the spread has INCREASED by 13
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 Thursday. All Indicators are now neutral.
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.
Bottom line: I will wait for the S&P 500 to close above today’s
value of 1955 and re-evaluate then. Perhaps I'll be moving back in on Monday.
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
