“China is slowing and its property bubble is under severe
pressure. But it's not just copper that is under pressure…Finally, those who
think the US will decouple from this global mess are just as wrong as those who
thought China would decouple from the global economy in 2008.” – Mike Shedlock.
Commentary at…
http://globaleconomicanalysis.blogspot.com/
BEARS BECOME BULLS (MarketWatch)
Some of Wall Street’s biggest bears have turned into
bulls, but top strategists still see room for only a modest rise by the S&P
500 index through the end of the year. On Tuesday, Wells Fargo’s Gina Martin
Adams threw in the towel. Previously among the most bearish strategists on the
Street with a 1,850 year-end target for the S&P, Adams, the bank’s senior
equity strategist, dropped her year-end forecast and replaced it with a
12-month target of 2,100.” Story at…
PERCENTAGE OF BEARISH ADVISORS AT 27-YEAR LOW (Hussman
Funds)
“Last week, Investors Intelligence reported that the
percentage of bearish advisors has dropped to a 27-year low of 13.3%, a level
last seen in 1987 a few months prior to the market crash of that year. Needless
to say, investors do not like to hear cautious voices in a speculative market
that rewards the absence of caution…Howard Marks observed last week: “Today I
feel it’s important to pay more attention to loss prevention than to the
pursuit of gain. Although I have no idea what could make the day of reckoning
come sooner rather than later, I don’t think it’s too early to take today’s
carefree market conditions into consideration. What I do know is that those
conditions are creating a degree of risk for which there is no commensurate
risk premium.” – John Hussman, PhD, Weekly Market Comment at Hussman Funds at…
MARKET REPORT
Wednesday, the S&P 500 was up about 0.4% to 1996 (rounded).
VIX was down about 4% to 12.90 (at 4:07).
The yield on the 10-year Treasury Note rose slightly 2.54%
at the close; the bond Ghouls remain worried.
(This may actually be foreign demand driving down yields rather than
fear of an economic decline.)
CORRECTION SOON
The daily up/down moves in the market continue to be
abnormally small and that usually leads to a pullback of some kind. Further,
for the last 3-weeks, there has been a tendency for smaller up moves and larger
down moves in price-volume. This is a trend suggesting a correction. RSI
(14-day SMA) was 56 Wednesday at the close, but it was 90 just 6-days ago. 70 is the overbought
value for this indicator. Market Internals continued down today (see below for
details). The percentage of stocks in the NYSE above their 200-dMA was 56% as
of Tuesday’s close (data is a day late.). The trouble point for this stat is
62% so this is suggesting trouble ahead and very soon, but I doubt that it will
be the “big one” and it might just be another 5% trip to the lower trend line.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) fell to 47% at the close Wednesday.
(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-highs outpaced New-lows Wednesday. The spread (new-highs minus new-lows) was +5.
(It was +23 Tuesday). The 10-day moving average of change in the spread fell to
minus-17. In other words, over the last 10-days, on average, the spread has decreased
by 17 each day.
Internals remained negative on the market today and
continued to deteriorate.
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
Wednesday, the NTSM is HOLD. The volume indicator is Positive. All other
indicators are neutral.
MY INVESTED STOCK POSITION
I made a BUY call on Monday, 18 August 2014 because the
charts were looking better; therefore, I upped my invested percentage to 50%
invested in stocks on Tuesday 19 August.
The 5-10-20 Timer and Market Internals
both gave positive signals on 19 August confirming the previous day’s Buy
signal. 50% is Fully invested for me since I am semi-retired.
--INDIVIDUAL STOCKS FROM A VALUE
HOUND--
ENSCO (ESV): BUY…Sort
of…see below
For my initial discussIon see the NTSM blog at:
Dividend is 6%. PE is 8.5 so downside is limited.
“Ensco attracts heavy call buying…” (Yahoo Finance)
9/8/2014
Looks like the options boys like it at Monday’s price.
ESV held its own today (9/10/2014) even as oil prices continue to
fall. I’d say that is bullish, but this
stock will need to be held for the long term since there isn’t currently a
catalyst to take its price higher. In
the interim, I’ll collect the 6% dividend.
