“The PPI report showed producer prices were unchanged in August while prices, excluding food and energy, were up 0.1%…Pipeline pressures have not intensified, and headline producer price growth is likely to remain weak as energy prices soften.” Charts and details at…
https://www.briefing.com/Investor/Calendars/Economic/Releases/ppi.htm
You’d think that this would have been seen as good news (no inflation means FED may delay), but the futures continued to drop after the PPI release.
GARTMAN BULLISH ON OIL (CNBC)
Dennis Gartman said on CNBC today [Monday], there was very bearish news
over the weekend regarding oil (Russia sanctions and China economy), but Crude
finished up. That is bullish. “I think you’ve seen the lows in crude oil
for a reasonable period of time.” – Dennis Gartman. Video at…http://video.cnbc.com/gallery/?video=3000310465&play=1
This should help the drillers. They’re all making new lows, including my favorite, Ensco.
OVER VALUATION (Vector Grader)
Market Cap/GDP has a median value of 0.65 since
1950. It now stands at 1.27, nearly
twice the median value. Warren Buffet
said Market Cap to GDP is "probably the best single measure of where
valuations stand at any given moment." Chart at…http://www.vectorgrader.com/indicators/market-cap-gdp
MARGIN DEBT AND LOW CASH LEVELS: CORRECTION AT ANY TIME
(The Streeet)
“High margin debt and low levels of cash may mean that
the stock market will pop at any time. [“Pop”
as in Bubble popping.] The New York Stock Exchange measure of margin debt set an all-time high of $466
billion in February, and the latest reading is $460 billion for July.
Meanwhile, the American Association on Individual Investors Asset Allocation
Survey shows that the level of cash was at a 14-year low at 16% in August.”
Story at…
http://www.thestreet.com/story/12878392/1/bubble-talk-what-high-margin-debt-low-cash-levels-mean-for-stocks.html?puc=yahoo&cm_ven=YAHOOMARKET REPORT
Tuesday, the S&P 500 was up about 0.8% to 1999 (rounded).
VIX was down about 10% to 12.73.
The yield on the 10-year Treasury Note remained 2.59% at
the close.
RISING RATES NOT GOOD FOR THE S&P 500 (Yahoo Finance)
“‘We certainly do expect rates to move higher, and as it relates to equities, this is a negative for equities in the short term,’ said Erin Gibbs, equity chief investment officer at S&P Capital IQ.” Story at…
http://finance.yahoo.com/blogs/talking-numbers/the-most-surprising-trade-of-the-year-is-finally-turning-around-213951126.html
Rising rates are strengthening the dollar and that will pressure multi-national companies.
STATISTICALLY SIGNIFICANT DAY – SUGGESTS A DOWN DAY
WEDNESDAY
Tuesday was statistically-significant in my system. The just means the size of today’s move was
higher than the recent normal as measured by standard deviation from the
norm. That implies Wednesday will be a
down-day about 62% of the time. This is
the fourth of these above average days in the last 8-days.
CORRECTION SOON? ODDS FAVOR A PULLBACK
Even though today was a fairly big move, the daily
up/down moves in the market continue to be abnormally small and that usually
leads to a pullback of some kind. This trend is suggesting a
pullback/correction. The percentage of stocks in the NYSE above their 200-dMA
fell to 53% as of Monday’s close – it was 55% Friday (data is a day late). The
trouble point for this stat is 62% so this is suggesting continuing trouble. With
the VIX falling 10% today, you’d have to say that a down-day tomorrow is not
expected by most market participants.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) rose to 42% 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-30
. (It was -47 Monday). The 10-day moving average of change in the spread fell
to minus-24. In other words, over the last 10-days, on average, the spread has
decreased by 24 each day. The smoothed 10-dMA
of Up-Volume is advancing so the internals switched to 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
Tuesday, 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
Dividend is 6%. PE is 8.5 so downside is 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
Russian sanctions are expected to hurt oil and the drillers got caught up in the selling Friday and a little today.
