“The United States economy grew at a rate of slightly more than 2 percent as 2014 drew to a close, but economists fear some of that momentum flagged in the first quarter of this year…Guy Berger, United States economist at RBS, said smaller stockpiles than initially estimated for last quarter actually suggested slightly healthier growth in the current quarter.” Story at…
http://www.nytimes.com/2015/03/28/business/economy/gdp-q4-final-revision-us-economy.html?_r=0
MICHIGAN SENTIMENT (Advisor Perspectives)
“The University of Michigan preliminary Consumer Sentiment for March came in at 91.2, down 4.4 points from the final reading of 95.4 in February…To put today's report into the larger historical context since its beginning in 1978, consumer sentiment is now 7 percent above the average reading (arithmetic mean)…” Analysis and charts at…
http://www.advisorperspectives.com/dshort/updates/Michigan-Consumer-Sentiment-Index.php
ONE BIG REASON FOR MARKET SKIDDISHNESS
Secular Bear Markets usually have 3-major drops; so far we have seen only two: 2000 and 2007. There are reasons to believe that the secular bear market that started in year-2000 is not over. FACTSET notes that analysts now are predicting a fall in earnings for the first quarter for the S&P 500, based mainly on the falling earnings of oil related companies. Other major Indices don’t look good either. The markets stalled when the NASDAQ composite got within 1% of its 2000 high. The NYSE composite is also having problems. The NYSE Composite hasn’t broken higher in more than 7-months.
It has been my long held opinion that the markets would not get above their year 2000 highs. I was measuring those highs on the S&P 500. My mistake; but the markets may not get above their year-2000 highs when measured by the Nasdaq Composite. The Nasdaq was the most extreme of the high flyers in 2000 and, like prior bear markets, it may be that the index can’t get above those prior highs. It is unlikely that other major indices will diverge, so the entire market would be at risk if the NAS Composite can’t make appreciably higher-highs. That will be important to watch.
MARKET REPORT
-Friday, the S&P 500 was up about 0.24% to 2061 at the close.
-VIX was down about 5% to 14.97.
-The yield on the 10-year Treasury Note dropped to 1.94%.
CORRECTION OVER? (ANALYSIS BASED ON S&P 500 DATA)
It looks like, yes. The S&P 500 tested the prior low in the morning. Today’s low volume and improving market internals strongly hint of a correction end. VIX never acted like the markets were going to fall, but it’s never certain! {I put some money into a 2x Russell 2000 ETF (UWM) today so I hope I am right. If not, I’ll close the position in a hurry Monday.} There was some late day buying and that’s also a clue that the pros don’t think there will be a correction.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) popped up to 54% at the close Friday. (A number above 50% is usually GOOD news for the markets.) In another reversal (this time positive), New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +21. (It was -4 Thursday.) The 10-day moving average of change in the spread was +7. In other words, over the last 10-days, on average; the spread has INCREASED by 7-each day.
Internals remained NEUTRAL on the market, but they improved dramatically and would have been positive if the up-volume had been higher.
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 2014, using these internals alone would have made a 9% return vs.
13% 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, nearly straight-up year like 2014.
NTSM
Friday, the NTSM analysis remained HOLD. The PRICE indicator is positive. VIX, VOLUME and SENTIMENT indicators are neutral, although (as always) sentiment remains extremely high.
MY INVESTED STOCK POSITION
I remain fully invested at 50% invested in smaller cap-stocks
in the long-term portfolio with some international stocks. 50% is conservative,
but appropriate for a conservative retired guy.
The Dow Jones US Completion Index (all stocks except the S&P 500) continues to outperform the S&P 500. Since February it is 4% ahead of the S&P 500.
THRIFT SAVINGS PLAN (TSP) MEMBERS
My TSP Allocation: 50%-G; 10%-C; 25%-S; 15%-I. (50% cash is too high for non-retirees.).
