STOCK DIVIDEND YIELDS ABOVE TREASURIES – BULLISH (MarketWatch)
“Long-term investors are getting a rare signal suggesting that now might be a great time to buy stocks — that is, if they are willing to risk a potential rough patch in the near term. For just the fourth time in over 50 years, the S&P 500’s dividend yield moved last week above the yield on the benchmark 10-year Treasury note. If history is any guide, this means 2015 could be a very good year for the stock market.” Story at…
http://www.marketwatch.com/story/stock-dividend-yields-are-above-treasury-yields----and-thats-bullish-2015-01-20
HOUSING BULLISH (WSJ)
“Housing starts rose 4.4% in December from a month
earlier to an annual rate of 1.089 million, the Commerce Department said
Wednesday. Starts on single-family homes, which exclude apartments and reflect
the bulk of the market, rose to a rate of 728,000, the highest level since
March 2008.” Story at… http://www.wsj.com/articles/housing-starts-rise-4-4-in-december-1421847270
CENTRAL BANKS: A DESTABILIZING FORCE (Advisor Perspectives)
“…In case of the U.S. dollar, investors appear to be counting on a hawkish Fed. We call the Fed’s posturing one of wishful thinking, doubting they can be so tough in light of falling inflation expectations. The Fed’s promise to be patient in raising rates appears to signal that they indeed want to be, well, late. Not surprisingly, gold has done quite well in this environment: with real interest rates firmly in negative territory in much of the world – including the U.S., this shiny brick that pays no interest appears to be a formidable competitor.
Implications for investors go much further, though: central banks may be becoming a destabilizing force. The Swiss example shows how imbalances can correct violently as policies are reversed. What happened to the Swiss franc can happen to stocks and bonds. For more details on this, please read my OpEd in the Financial Times.” – Axel Merk, Merk Investments. Commentary at…
http://www.advisorperspectives.com/commentaries/merk_012115.php
Hmmmm. It may be a good idea to own some gold now. The SPDR Gold Shares ETF is ticker symbol GLD.
MARKET REPORT
-Tuesday, the S&P 500 was up about 0.5% to 2032 (rounded).
-VIX fell about 5% to 18.85.
-The yield on the 10-year Treasury Note rose to 1.87%.
The Industrial Select Sector (XLI) Exchange Traded Fund (ETF) is a basket of Industrial cyclical stocks. It is currently outperforming the S&P 500. When cyclicals do better than the market it is usually bullish. It infers investors are not concerned about a recession since cyclicals will under-perform in a recession. This is a bullish indicator.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rocketed higher to 54% at the close Wednesday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Wednesday. The spread (new-highs minus new-lows) was +77 (It was +119 Tuesday). The 10-day moving average of change in the spread declined to +6. In other words, over the last 10-days, on average, the spread has INCREASED by -each day.
Internals remained positive on the market. The concern that new-highs AND new-lows are elevated has been overcome.
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 NTSM analysis is HOLD. The VIX indicator remains negative; other indicators are neutral.
MY INVESTED STOCK POSITION
I remain fully invested at 50% invested in stocks. 50% is
conservative, but appropriate for a retired guy. I added QLD and XIV as a trade with some excess
cash on 20 January. I’ll cover quickly,
if the stock market falters.
