Tuesday, the S&P 500 was down about 1% to 1920 (rounded).
VIX rose about 12% to 16.87.
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 rose to 50% Monday (data is a day late). 61% is the trouble point for this stat.
As I said yesterday, 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) fell to 40% at the close Tuesday. (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 Tuesday. The spread (new-highs minus new-lows) was minus-46. (It was minus-42 Monday.) The 10-day moving
average of change in the spread fell to minus -20. In other words, over the last 10-days, on
average, the spread has DECREASED by 20 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 remaned
SELL Tuesday.
Indicators are as follows:
SENTIMENT: Sentiment remained neutral, but fell to 76%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Monday (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 76%-bulls (3 out of every 4 investors
betting long) is extremely high so I could easily call it negative. PRICE,
VOLUME and VIX indicators are all negative. 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.
