“Most members of the committee want the current guidance clarified to emphasize that the timing of a rate hike is data dependent…Markets quickly rallied on the news as traders grew assured that the central bank remains committed to keeping interest rates lower until it is convinced the economy has healed sufficiently.” Story at…
http://www.cnbc.com/id/102071171
Options traders got the news too. The VIX fell another 5% and it had been falling since about 11 AM.
THREE OF SIX BEAR MARKET INDICATORS ARE RED (CNBC)
“David Darst, senior advisor at Morgan Stanley Wealth Management, likes lists,
and he shared his bear market checklist Wednesday on CNBC a day after the Dow Jones Industrial Average dropped 272
points. On "Squawk Box," he said three of his six
indicators of a bear market—a drop of 20 percent from record highs—are flashing
a red light.” Story at… http://www.cnbc.com/id/102069891
Darst said that only three indicators are now red and he sees the market going higher in the longer term. "It can still run further," he said. "The market is [just] basically taking a flu shot." Perhaps the FED cured it!
CORRECTION OVER - KEY REVERSAL DAY
Traders noted that today was a “key-reversal-day” signified
by today’s value of the S&P 500 index going lower than yesterday’s low, but
finishing higher than yesterday’s high. It’s a bullish indication. I’m sticking with
my earlier call – I think the pullback is over.
If the Russell 2000 falters, I may have to worry.
MARKET REPORT
Wednesday, the S&P 500 was up 1.8% to 1969 (rounded). (Volume
was about 25% bigger than the monthly average so this was a strong move with
conviction.)
The Index traded down to within 1% of its 200-dMA and that may
have spurred some buying.
VIX was down about 12% to 15.11. The yield on the 10-year Treasury Note fell slightly to 2.32%. Perhaps the Bond Ghouls didn’t like the Fed statement as much as the stock crowd.
RSI
RSI fell into “oversold” territory today in the morning,
but recovered to 48 by the close (Oversold is 30). Many follow the RSI for trading so that may
have triggered some buying too.
STATISTICALLY SIGNIFICANT DAY WEDNESDAY
Wednesday 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 Thursday
will be a down-day about 62% of the time. I wouldn’t count on it this time
since market participants can get excited at a bottom (this still looks like a
bottom to me) and keep the market moving up, regardless of prior trends. If this pullback really is over, I’d like to
see at least 3-up-days in a row to be convinced.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 46% at the close Wednesday. (A number below 50% is usually bad news for the markets.) New-lows outpaced New-highs Wednesday. The spread (new-highs minus new-lows) was minus-241. (It was -149 Tuesday). The 10-day moving average of change in the spread fell to -14. In other words, over the last 10-days, on average, the spread has decreased by 14 each day.
Internals remained neutral. I expect improvement in
Internals Thursday. If I don’t get it, I’ll
start to worry.
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 long term indicator is HOLD
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.
50% is Fully invested for me since I am
semi-retired. --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): HOLD
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.
Wait for a bottom call. I will sell Ensco if it drops much further. I married this stock and that is always a mistake. The divorce will be messy. That probably means it is near a bottom.
