“There’s no bottom in sight for oil prices. Analysts at Goldman Sachs say that U.S. crude needs to hover at $40 for most of this year in order to drown out oversupply from shale producers. West Texas Intermediate crude falls 4.4% on Monday to $46.26 a barrel, a nearly six-year low.” Story at….
http://blogs.barrons.com/focusonfunds/2015/01/12/crude-plummets-to-nearly-six-year-low-after-goldman-sachs-slashes-oil-price-forecast/?mod=yahoobarrons&ru=yahoo
That about says it all for stocks; the markets don’t like rapidly falling oil.
STOCK MARKET VALUATION 2015 (Seeking Alpha)
“…current valuation is not as attractive as it was at the beginning of each year since the Great Recession. Higher valuation implies lower returns, and more importantly, earning lower returns at relatively higher levels of risk. I don't believe that this undeniable fact should incite panic, but it does imply a more cautious approach and view regarding future return potential and risk.” - Chuck Carnevale. Commentary at…
http://seekingalpha.com/article/2806655-the-stock-market-2015-a-sector-by-sector-valuation-perspective-part-1-an-overview?ifp=0
This was a well-documented good piece on valuation. Combine it with earlier commentary from Doug Short and FactSet (blog post... http://navigatethestockmarket.blogspot.com/2015/01/jobless-claims-downmarkets.html) and there is plenty of reason to expect lower returns ahead and perhaps some real corrective action in the markets.
COPPER FALLING (Bloomberg)
“Economists say the world economy will do better this year. The copper market is saying that won’t be enough to eliminate a supply glut that’s lasted at least two years. Prices of the metal slumped to the lowest since October 2009 today, fueled by concerns that production is outpacing demand.” Story at…
http://www.bloomberg.com/news/2015-01-12/copper-falls-below-6-000-to-five-year-low-on-demand-concerns.html
MARKET REPORT
-Monday, the S&P 500 was down about 0.8% to 2028 (rounded).
-VIX was up about 12% to 19.57.
-The yield on the 10-year Treasury Note fell to 1.91%.
We’ve seen the market up last week about 3% in 2-days followed by a 1.6% drop in the last 2-days. This isn't much of a drop so far. Internals are mixed, but they need to get more positive or the markets will worry.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell 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 +34 (It was +94 Friday). The 10-day moving average of change in the spread was down to minus-17. In other words, over the last 10-days, on average, the spread has DECREASED by 17-each day.
Internals are neutral on the market.
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
Monday, the long-term NTSM system analysis remained HOLD. The VIX indicator remains negative; other indicators are neutral.
I remain fully invested at 50% invested in stocks. 50% is conservative, but appropriate for a retired guy.
