Monday, the S&P 500 was up 0.7% to 1939 (rounded).
VIX fell about 11% to 15.12.
The yield on the 10-year Treasury Note remained 2.49% at the close; the bond Ghouls are still worried.
The percent of stocks on the NYSE above their 200-dMA
fell to 49% Friday. 61% is the trouble
point for this stat.
A bounce to the 1955 area wouldn’t be a surprise in the next couple of
days. A big up-day would indicate short
covering and that might be a good time to establish a short position.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) rose to 44% 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%.)
New-lows outpaced New-highs Monday. The spread (new-highs minus new-lows) was minus-42.
(It was minus-86 Friday.) The 10-day
moving average of change in the spread rose to minus -10 . In other words, over the last 10-days, on
average, the spread has DECREASED by 10 each day. The smoothed 10-dMA of up-volume
was DOWN today and the Internals remained negative on the market, however, they
did improve today.
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 remaned
SELL Monday. The NTSM indicators turned negative 6-days after the top. The last time all indicators were negative within 6-days after a top was April of 2010 when the S&P 500 fell 16% into June. That could be coincidence so I wouldn’t put too much faith in it. This Fed driven market has been difficult to call.
Indicators are as follows:
SENTIMENT: Sentiment remained neutral, but FELL to 77%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Wednesday (data is a day late). (84% is the current
negative level for the Sentiment indicator.) Sentiment was 85%-bulls on 19 May.
While officially neutral, a Sentiment of 77%-bulls (3 out of every 4 investors
betting long) is extremely high so I could easily call it negative.
PRICE and VIX indicators are negative. VOLUME turned neutral Monday.
NTSM remains SELL.
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
I like the dividend. With a PE of 8.5, ESV has limited downside in any pullback that may occur. During corrections I hang onto low PE stocks and funds.
TESARO
TSRO is making a triple bottom and may be worth another look. It has no earnings though it has promise of
future earnings based on cancer trials.
I’ll look at it after a pullback (assuming it occurs). I won’t buy any stocks until correction worries
are out of the way, especially one with no earnings.
KRISPY CREME
I looked at KK, but the PE is pretty high so that one is off the table
for me.
