“I find the current global backdrop much more problematic than 2007/08. Having become a historic Bubble, China’s financial system and economy are incredibly more fragile than six years ago. Throughout the emerging markets, economies and Credit systems have been damaged by six years of reckless excess. And how about Europe – financial systems, economies, societies and geopolitics? Across the board, European fundamentals have suffered frightening deterioration. And I can only concur with comments repeated Friday by Bundesbank President Weidmann: “ECB’s QE will not fix the Eurozone’s problems.” Commentary at…
http://www.prudentbear.com/2014/10/the-downside-of-do-whatever-it-takes.html#.VELBgBCHlak
The above is from the Prudent Bear so it must be considered a Perma-Bear commentary. That doesn’t mean that it is wrong. It does point to one of the sources of the recent turmoil in the Stock Market – Europe. I happened to catch a few minutes of Bob Brinker’s “Money Talk” radio show Sunday. He suggested the recent market weakness had little to do with Russian aggression or Middle East problems, because these problems have been around for a long time. He pointed to health concerns (I assumed he meant Ebola) and European economic weakness.
CLUSTERS OF DOWN DAYS ARE A CONCERN (Hussman Funds)
“An interesting feature of the recent air-pocket in stock prices is that many observers characterize the depth of the recent selloff as meaningful. What we’ve seen in recent weeks is very minor in a historical, full-cycle context. The market has not experienced even a single 3% down day in nearly 3 years. The chart below shows the cumulative number of 3% down-days in the Dow Jones Industrial Average over the prior 750 trading sessions, in data over the past century. It’s certainly not an indicator that we would use in isolation, but in given current valuations and the recent deterioration in market internals, we should not be surprised if this absence of large daily losses is short-lived…At present, conditions remain unfavorable, and the potential for abrupt and vertical losses should not be taken lightly.”
Weekly Market Commentary from John Hussman, PhD at…John Hussman, Phd, must be looking at longer term internals. My 10-day look at internals is improving rapidly. The 100-day moving average of advancing stocks dropped slightly below 50% at the low last week, but recovered to 50% today. The average over the last 4-years has been 52% for the 100-dMA. This stat has spent very little time below 50% over the last 4-years. Unless it falls below 50% I am not too worried.
CORRECTION SURVIVAL (Money Morning)
“When it comes to corrections, the first thing you need to know is that stock market downturns are a fact of investing. 'People forget that nothing goes up forever," said Money Morning Chief Investment Strategist Keith Fitz-Gerald, a seasoned market analyst with 33 years of experience. While that may seem self-evident, many retail investors fail to plan for market corrections. That can lead to a reactive strategy based on emotions, which is OK if you don't mind returns that lag the overall market. The second big point is investors should not view stock market corrections as a bad thing.
'Reversals are very, very rarely anything more than
a short-term adjustment,' Fitz-Gerald said. 'It usually means many
great companies are going on sale." Rather than dwell on short-term
losses, Fitz-Gerald says investors should be looking for opportunities.'
Commentary at…
http://moneymorning.com/2014/10/17/your-stock-market-correction-survival-guide/DEJA VUE SELLOFF – TIME TO GET BULLISH (MarketWatch)
McClellan
Market Report http://www.marketwatch.com/story/t he-deja-vu-selloff-is-reaching-a-crisis-bottom-mcclellan-2014-10-17
MARKET REPORT
Monday, the S&P 500 was up 0.9% to1904 (rounded), just below the 200-day moving average. (Traders will watch to see if the Index can break thru the 200-dMA and keep moving up.)
VIX was down about 16% to 18.57.
The yield on the 10-year Treasury Note fell to 2.19%. (The Bond-ghouls seem more worried about the economy…OR…this is just buying from other parts of the world where yields are low.)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 49% at the close Monday. (A number below 50% is usually bad news for the markets.) New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +12. (It was +22 Friday and -577 Thursday). The 10-day moving average of change in the spread fell to +4. In other words, over the last 10-days, on average, the spread has increased by 4 each day.
Internals remained neutral on the market because the 10-dMA of stock advancing remains below 50%.
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
As I have posted several times I have been buying since last Friday. I bought more today so I am setting the NTSM long term indicator to BUY. (That’s based on technical analysis since the NTSM indicators will take a while to reset.)
MY INVESTED STOCK POSITION
I moved some funds back into the market on Friday, 17
October 2014 as a trade and increased my position
in stocks from 30% to about 40% overall.
I added more Monday to make my stock investments up to 50%. This
move was based on my comments 16 Oct that a Tradable bottom had been set. I may add more depending on price action. This was certainly a tradable bottom and may
be a bottom that will last thru the end of the year.--INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): HOLD
