”One firm whose work we have followed for a very long time is Leuthold Group…At Sungarden, we see Leuthold’s outstanding work as one important segment of our quantitative research (alongside the fundamental and technical work we do). So, when Leuthold makes a major forecast, we pay close attention. And in their January Green Book, they said they see the U.S. stock market beginning a “topping process” which started last July. They believe that this will ultimately take U.S. stocks down by 25-30% in either 2015 or 2016. Leuthold points to symptoms such as a weak high yield bond market, lagging relative performance of the NYSE Composite Index (which was the focus of our 11/28/14 blog), and very bullish newsletter writers.” - Sungarden Investment Research. Posted at…
http://www.advisorperspectives.com/commentaries/sungarden_012515.php
The above commentary looks quite reasonable to me. Timing of this correction is not likely before Fall of 2015.
NEW STOCK MARKET HIGHS COMING (Financial Sense)
“John Kosar CMT, Director of Research at Asbury Research LLC. John believes the market will resume the October advance and move to new highs, once we take out the sideways range which has been in place since early December.” Commentary at…
http://www.financialsense.com/financial-sense-newshour/john-kosar/new-leg-up-coming-stocks
In the short term I agree with this view. New Highs look highly probable, barring unforeseeable bad news (Greece, Russia, Euro, Ukraine, Oil, etc.)
HUSSMAN ON THE MARKETS (Hussman Funds)
“…the financial markets are already pushed to extremes by central-bank induced speculation. With speculators massively short the now steeply-depressed euro and yen, with equity margin debt still near record levels in a market valued at more than double its pre-bubble norms on historically reliable measures, and with several major European banks running at gross leverage ratios comparable to those of Bear Stearns and Lehman before the 2008 crisis, we're seeing an abundance of what we call "leveraged mismatches" - a preponderance one-way bets, using borrowed money, that permeates the entire financial system. With market internals and credit spreads behaving badly, while Treasury yields, oil and industrial commodity prices slide in a manner consistent with abrupt weakening in global economic activity, we can hardly bear to watch.” – John Hussman, PhD. Weekly Market Commentary from Hussman Funds at…
http://www.hussmanfunds.com/wmc/wmc150126.htm
RUSSELL 2000
This chart has to improve or the crash/correction calls will be right…and relatively soon. Why? The Russell has made a triple top and has been stalled going back to March of 2014. These are smaller US companies. If they can’t make money in the US it is likely to mean big trouble for companies in the major indices that are already struggling with currency headwinds overseas. My guess is that we’ll see a bullish breakout of the Russell and I am going to shift my investment portfolio toward small caps (S-fund in the TSP, my retirement system) at the end of this month. (The “S”-fund tracks the Dow Jones U.S. Completion Total Stock Market Index (DWCPF). That’s everything except the S&P 500.) The IWM (Russell 2000) would also be a good place to be. (I am currently holding IWM outside of my retirement portfolio).
Chart from…http://finance.yahoo.com/echarts?s=%5ERUT+Interactive#
MARKET REPORT
-Monday, the S&P 500 was UP about 0.3% to 2057 (rounded). (The Russell 2000 was up 1% today.)
-VIX fell about 7% to 15.52.
-The yield on the 10-year Treasury Note rose to 1.83%.
The lack of any market response to the Greek Election (where anti-austerity supporters came into power) is bullish. Greece seems to be a non-issue for the moment. Apparently, the markets have decided there is no US bank exposure to a Greek bankruptcy…or…perhaps there is just a wait and see on Greece.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 54% at the close Monday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +204. (It was +262 Friday). The 10-day moving average of change in the spread increased +11. In other words, over the last 10-days, on average, the spread has INCREASED by 11-each day.
Internals improved but remained neutral on the market due to low advancing volume. Overall, this indicator still looks good and I am unconcerned about internals.
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 PRICE indicator is positive; other indicators are neutral.
MY INVESTED STOCK POSITION
I remain fully invested at 50% invested in stocks in my long-term portfolio. 50% is
conservative, but appropriate for a retired guy. I added QLD and XIV as a trade with some
excess cash on 20 January to the trading portfolio due to the BUY signal
bottom. (Overall I am closer to 60% invested right now since I apply some cash
to trading positions when I am able to identify bottoms as published after the
recent low on 15 Jan.) I expect to sell my XIV position when the VIX reaches
about 15. 
