“US companies had 4.998 million job openings in January, which was a bit lower than the 5.050 million expected by economists. December's number was revised down to 4.877 million from an earlier estimate of 5.028 million.” Story at…
http://www.businessinsider.com/jolts-january-2015-2015-3
WHOLESALE INVENTORIES UP (Reuters)
“U.S. wholesale inventories unexpectedly rose in January as sales recorded their biggest decline since 2009, pushing the number of months it would take to clear warehouses to its highest level in more than 5-1/2 years…The cooling in activity is seen temporary and a consumer spending-driven rebound is anticipated in the second quarter.” Story at…
http://www.reuters.com/article/2015/03/10/us-usa-economy-wholesale-idUSKBN0M61G120150310
AWFUL TIME TO INVEST (Hussman Funds)
“We continue to observe one of the most overvalued, overbought, overbullish syndromes in the historical record, combined – and this feature is central – with deterioration in market internals suggestive of a shift toward risk-averse preferences among investors. The resulting combination places current conditions among instances that we identify as a “Who’s Who of Awful times to Invest” (see last week’s comment: Plan to Exit Stocks in the Next 8 Years? Exit Now). Based on historical outcomes associated with those prior instances (which prior to the current market cycle, include only 1929, 1972, 1987, 2000 and 2007), we continue to view the stock market as vulnerable to significant downside risk both in the near-term and over the completion of the present market cycle.” – John Hussman, PhD. Weekly Market Commentary at…
http://www.hussmanfunds.com/wmc/wmc150309.htm
It is not a coincidence that the Nasdaq Composite was within 1% of its all-time high last week. That has put a lot of concern in the minds of many investors.
HUSSMAN ON VALUATION
“…median equity valuations exceed those at the 2000 peak on price/earnings, price/revenue, and enterprise value/EBITDA.”
http://www.hussmanfunds.com/wmc/wmc150309.htm
VALUATION FROM FACTSET (Factset Earnings Insight)
“The forward 12-month P/E ratio for the S&P 500 now stands at 17.1, based on yesterday’s closing price (2101.04) and forward 12-month EPS estimate ($122.88). This P/E ratio is well above the 10-year average (14.1). In fact, this marks the highest forward P/E ratio for the index since December 31, 2004.”
Chart and commentary from Factset at…http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_3.6.15/view
The current PE of 17.1 represents a 21% premium to the 10-year average PE of 14.1. {The above chart is hard to read; it covers 10-years.}
MARKET REPORT
-Tuesday, the S&P 500 was down about 1.7% to 2044.
-VIX was about 11% to 16.64.
-The yield on the 10-year Treasury Note was down to 2.13%.
PULLBACK? YES
The failing market internals continue to signal a continued down move.
PULLBACK? NO
Tuesday the S&P 5000 broke 0.8% below the 50-dMA and the S&P 500 closed close to the lower trend line. RSI is very close to Oversold. The Final Tick (the number of final up-trades minus down-trades) was -848 and TRIN (Traders Index) was a high 2.65. Taken together, those Tick and TRIN stats usually put an end to a down move, so perhaps the index doesn’t have too much farther to fall. My guess is that the S&P 500 will not drop below the 200-dMA (2001) and that is about 2.1% lower than today’s close if that far. We might have a better handle on the trend after tomorrow. At this point its an educated guess.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 44% at the close Tuesday. (A number below 50% is usually BAD news for the markets.) New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus -104. (It was -32 Monday). The 10-day moving average of change in the spread was minus-27. In other words, over the last 10-days, on average, the spread has DECLINED by 27-each day.
Internals remained negative on the market and are continuing to deteriorate.
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
Tuesday the NTSM analysis remained HOLD. The PRICE indicator is positive. UP-moves have been much larger than down recently and that has pushed PRICE to a positive indication. VIX and SENTIMENT indicators are neutral, although sentiment remains extremely high. VOLUME is now negative.
I remain fully invested at 50% invested in stocks in the long-term portfolio. 50% is conservative, but appropriate for a retired guy.
