Friday, the S&P 500 was UP 0.5% to 2071 (rounded).
VIX was down about 0.8% to 16.68.
The yield on the 10-year Treasury Note rose to 2.21.
My guess is that the Shorts finished some late short-covering around 3:30 and the Index faded down into the close. I’d expect more of a fade on Monday, but I am still surprised by the strength of the rally. Oil was up 6% today so the 3-day rally may be related to the bounce in oil. (Hmmm. Did those guys on Wall Street have inside information? Do ya’ think?)
The first bounce in a bear market is usually early and oil is definitely in a huge bear market. (The stock market is certainly not currently in a bear market.) Thus, it is likely that oil and oil related stocks have not seen their lows. The stock market may have more trouble ahead if it remains coupled to oil. There is less conviction now that falling oil is bad so the stock market doesn’t have to follow oil down. Still…
Chart wise the S&P 500 is close to the upper trend line so, if anything, upside potential is somewhat subdued here; I am not in a great rush to get in, but I will strictly follow my numbers. The Buy signal is based on the 5-10-20 Timer and market internals. If we continue up, I will be a Buyer at or above 2084. In October we identified a bottom. This time there was no way to call that bottom – I think I was out maneuvered by the computers.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) was higher to 49% at the close Friday. (A number below 50% is usually BAD news for the markets.) New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +190. (It was +168 Thursday). The 10-day moving average of change in the spread was +26. In other words, over the last 10-days, on average, the spread has INCREASED by 26-each day.
Internals remained neutral on the market, but only because the 10-day moving average of %-stocks advancing has not broken above 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
The long-term NTSM system analysis remained HOLD today. The Buy signal is based on the 5-10-20 Timer and market internals unless VIX falls dramatically and right now that doesn’t look likely. If we continue up, I will be a Buyer at or above 2084.
MY INVESTED STOCK POSITION
I am 30% invested in stocks as of 16 Dec based on the
SELL signal the previous day. Currently, the Buy signal is based on the 5-10-20 Timer and market internals. If we continue up, I will be a Buyer at or above 2084.
In October we identified the bottom. This time there was no way to call the bottom – I think I was out-maneuvered by the computers.
I will be very busy over the Holidays so I may not be able to post until after the New Year. Have a great Hanukkah Season and a Merry Christmas!
