“The Conference Board’s gauge, a measure of the outlook for the next three to six months, increased 0.5 percent after a 0.3 percent gain in April…“The economy is in the process of rebounding from a dismal first quarter,” said Robert Dye, chief economist at Comerica Inc. in Dallas…We’ll “see a moderate-growth economy for the remainder of this year that will allow the Fed to continue to unwind extraordinary policy.” Story at…
http://www.bloomberg.com/news/2014-06-19/leading-economic-indicators-index-in-u-s-rises-for-fourth-month.html
JOHN HUSSMAN - A WILD AND CRAZY GUY.
A long time reader asked me why I continue to quote Hussman. I certainly understand the question: One need only review the comparison of the Hussman Strategic Fund to the S&P 500. In the last 5-years it is down nearly 25% while the S&P 500 has more than doubled. See the Hussman Strategic Fund Annual
Report
at…
http://www.hussmanfunds.com/pdf/annrep14.pdfI appreciate John Hussman’s academic and analytic approach. He has been wrong recently because his call is early, but there will be a 50% crash again – we just don’t know when. As he noted recently: “…overvalued, overbullish, overbought syndromes that have been a crucial warning in prior market cycles have persisted much longer without consequence in this (spectacularly distorted) cycle.” – John Hussman, PhD, Weekly Market Commentary for 15 Sept 2014 at…
http://www.hussmanfunds.com/wmc/wmc140915.htm
Why do I quote Hussman?: He reminds me that the markets can be a risky place. That is an important fact to remember since I remain fully invested.
MARKET REPORT
Friday, the S&P 500 was up about a point to 2010 (rounded).
VIX was up about 0.7% to 12.11.
The yield on the 10-year Treasury Note dropped to 2.6158% at the close.
Volume was about twice normal today due to the Alibaba IPO and perhaps options expiration.
***CORRECTION WATCH***
RSI (14-day SMA): 53. (70 is overbought/30 is oversold)
STOCKS ABOVE THEIR 200-dMA on the NYSE: 55% at Thursday’s close. (61% is the trouble point.)
PERCENTAGE OF STOCKS ADVANCING (BREADTH): The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 44% at the close Friday. (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%.)
SENTIMENT: 73% (Measured as %-Bulls {Bulls/(Bulls+Bears)} in selected Rydex/Guggenheim Funds.) The trouble point is currently 84%-bulls.
PERCENT ABOVE THE 200-dMA: 6.2% (10% is a trouble point.)
It appears that there is a bit of flight to safety (safety = S&P 500) going on so I suspect the S&P 500 can move higher before a pullback.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) fell to 44% at the close Friday.
New-highs outpaced New-lows Friday.
The spread (new-highs minus new-lows) was +19. (It was +40 Thursday).
The 10-day moving average of change in the spread rose to minus-4. In other
words, over the last 10-days, on average, the spread has decreased by 4 each
day. The smoothed 10-dMA of Up-Volume is
advancing so the internals remained neutral.
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
Thursday, 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
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
ENSCO’s chart doesn’t look good now since it has fallen below prior lows as the oil drillers have not performed well. On the plus side, dividend is 6%. PE is 8.5 so downside is somewhat limited.
“Ensco attracts heavy call buying…” (Yahoo Finance) 9/8/2014
http://finance.yahoo.com/news/ensco-attracts-heavy-call-buying-104523422.html
“All of the drillers are getting killed. I'd stick with Ensco International (ESV)." – Jim Cramer, Mad Money. 9/11/2014
