After reading the headline of the CNBC article titled “Charts say market headed lower. What to sell” ( http://www.cnbc.com/id/102562736 ) I thought I’d better look at the dangerous chart that is so clearly calling for a selloff…but it isn’t. Here’s the current chart pattern.
Yes, as the article stated, there are lower highs, but
there are also higher lows. Together they form a symmetrical triangle (neither
rising nor falling) that I’ve highlighted with red dashed lines on the above chart. What’s that mean? Here’s the chart interpretation from
Investopedia...
“The
symmetrical triangle is mainly considered to be a continuation
pattern that signals a period of consolidation in a trend followed by a
resumption of the prior trend. It is formed by the convergence of a descending resistance
line and an ascending support
line. The two trendlines in the formation of this triangle should have a
similar slope converging at a point known as the apex. The price of the
security will bounce between these trendlines, towards the apex, and typically
breakout in the direction of the prior trend.” Definition at…http://www.investopedia.com/university/charts/charts5.asp
Now there could be a correction, but…it’s not a given
that the markets are going up or down based on the charts. BTW, the apex of the current pattern is
around 2075, so in theory, the markets will move up soon if the Investopedia
interpretation is correct. PS. Here’s my April fools post on CNBC; it’s apparently not true…
http://navigatethestockmarket.blogspot.com/2015/04/no-more-fear-mongering.html
(Well, I can’t point the finger too much; I have been known to post a few inflammatory headlines myself.)
CRUDE INVENTORIES (24/7 Wall Street)
“U.S. commercial crude inventories increased by 8.17 million barrels last week, maintaining a total U.S. commercial crude inventory of 466.7 million barrels, the tenth consecutive week of a higher total than at any time in at least 80 years.” Story at…
http://247wallst.com/energy-economy/2015/03/25/crude-oil-price-gains-despite-another-large-crude-inventory-build/
FOMC MINUTES – FED DIVIDED ON RATE HIKE IN JUNE (Bloomberg)
“Federal Reserve policy makers last month were split over whether they would raise interest rates in June, a debate that occurred before recent disappointing payroll figures, minutes of their most recent policy meeting showed.” Story at…
http://www.bloomberg.com/news/articles/2015-04-08/fed-officials-were-divided-over-june-liftoff-fomc-minutes-show
CORE EMPLOYMENT MARCH 2000 VS. MARCH 2015 (Global Economic Perspective)
“On a population-adjusted basis, age group 25-54 has a staggering 6,503,000 employment shortage compared to the year 2000. This does not even factor in part time employment….What we are left with is an economy that is roughly 6,503,000 jobs short of where it should be following six years of recovery (in age group 24-54 alone) …For 6.5 million people in "core age group" 25-54 there has been no recovery. And that number does not account for other age groups, for underemployment (e.g. engineers working in restaurants), for part-time employment, or for declining real wages for all but the top 10-20% or so.” - Mike "Mish" Shedlock. Commentary at…
http://globaleconomicanalysis.blogspot.com/
My cmt: Mike points out in his analysis that the way BLS calculates unemployment is arbitrary and perhaps even designed to obfuscate. If you were a Politician, wouldn’t you make the rules so you looked good?
MARKET REPORT
- Wednesday, the S&P 500 was up about 0.3% to 2082 at the close.
-VIX was down about 5% to 14.05.
-The yield on the 10-year Treasury Note rose to 1.90%.
Sentiment (%-bulls in Rydex/Guggenheim long/short funds) has been falling. This market can go higher.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 54% at the close Wednesday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Wednesday. The spread (new-highs minus new-lows) was +105. (It was +86 Tuesday.) The 10-day moving average of change in the spread was +2. In other words, over the last 10-days, on average; the spread has INCREASED by 2-each day.
Internals switched to Positive on the markets Wednesday.
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
Wednesday, the NTSM analysis switched to BUY due to the falling VIX. The important BUY was after the October low. The PRICE and VIX indicators are positive. 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 1 February, it is 4.8% 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, however, the “G”-fund did return 2.2% over the last 12-months and that is very good for risk-free money.)
