“U.S. producer prices unexpectedly fell in February on weak trade margins, pointing to muted inflation pressures that could argue against an anticipated June interest rate hike from the Federal Reserve. The Labor Department said on Friday its producer price index for final demand fell 0.5 percent after dropping 0.8 percent in January.” Story at…
http://www.cnbc.com/id/102502768
MICHIGAN SENTIMENT DECLINES (Bloomberg Business)
“Consumer confidence declined in March to a four-month low as optimism about the U.S. economy was tempered by weaker income expectations and a rebound in gasoline prices. The University of Michigan said Friday its preliminary consumer sentiment index decreased to 91.2 this month from 95.4 in February.” Story at…
http://www.bloomberg.com/news/articles/2015-03-13/consumer-sentiment-in-u-s-declined-in-march-to-four-month-low
PRO: OIL WILL FALL BELOW $40 (Marketwatch)
“Investors and traders looking for the oil rout to give way to a V-shaped recovery are likely to be painfully disappointed, said a hedge-fund manager who made a killing betting on falling oil prices in 2014. “I still believe we’re going to go below $40 and you’re going to have a look at the lows. I think it’s going to happen faster now than people think,” said Doug King, the London-based chief investment officer of Merchant Commodity Fund.” Story at…
http://www.marketwatch.com/story/capitulation-could-take-crude-below-40-says-successful-oil-bear-2015-03-13?dist=afterbell
Today WTI Crude was fell 4-5% today and finished around $45. Brent was similarly crushed.
MARKET REPORT
- Friday, the S&P 500 was DOWN about 0.6% to 2053.
-VIX was up about 4% to 16.04.
-The yield on the 10-year Treasury Note was up slightly to 2.12%.
PULLBACK OVER? MAYBE NOT
Friday the S&P 500 was down, but it didn’t quite test the 2040 level that was the prior low from Wednesday. I checked internals at the lows today and they did not indicate a bottom buy. A bottom call on small down moves (the market was only down 3.6% at the low) is mostly guesswork so it isn’t unusual to miss a bottom. It still doesn’t feel like a correction is coming so I am still looking at the 200-dMA as a possible bottom around 2003 (about 2.5% lower than today’s close). Alternatively, a successful test of the 2040 low on Monday would send the S&P 500 up quickly. There was significant late day buying Friday, so the markets may just skip a retrace to 2040 and head up on Monday. We'll see.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped back to 45% at the close Friday. (A number below 50% is usually BAD news for the markets.) In another reversal, New-lows again outpaced New-highs, Friday. The spread (new-highs minus new-lows) was minus-45. (It was +59 Thursday.). The 10-day moving average of change in the spread was minus-13. In other words, over the last 10-days, on average, the spread has DECLINED by 13-each day.
Internals remained neutral on the market and up volume (often an early mover in my basket of internals) remained positive.
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.
Friday the NTSM analysis is HOLD. The VIX indicator is positive. SENTIMENT, PRICE and VOLUME indicators are neutral, although 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 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 3.5% ahead of the S&P 500.
