“The Conference Board’s consumer confidence index dropped to a four-month low of 95.2 in April, weaker than the most pessimistic forecast in a Bloomberg survey of economists… Purchases rose less than projected in March -- up 0.9 percent after three straight declines…Instead, consumers were pocketing the windfall from the drop in gasoline prices and gains in employment. The saving rate climbed to 5.8 percent in February, the third straight increase and the highest in more than two years. Story at…
http://www.bloomberg.com/news/articles/2015-04-28/consumer-confidence-index-in-u-s-decreased-to-95-2-in-april
CRASH IN 2016/2017 (Financial Sense) "The US has not broken out of its bull market into a bear yet, but it is having a struggling period and probably in the second half of the year, let’s say from June onwards, it will breakout upwards for another run. However the same model goes on to say that the sixth and seventh years of the decade [2016 and 2017] have a high probability of being negative, and really quite largely negative. So we’re coming up to a sell but we’re not at the sell yet.” - Robin Griffiths, Chief Technical Strategist at ECU Group in London. Interview at…http://www.financialsense.com/contributors/robin-griffiths/us-market-bubble-crash-2016-2017
SENTIMENT
Sentiment (percentage of bulls) keeps going in a bullish direction…down. I calculate Sentiment as {Bulls/(Bulls+Bears)} using amounts invested in selected Rydex/Guggenheim funds. Currently the 5-day sentiment value is 80%-bulls. An extreme value, but down from its recent high of 84%-bulls on 5 March of 2015. That doesn’t sound like much of a drop, but when you consider it has taken almost 2-months of steady decline for sentiment to fall 4%, it is significant. I think this means that the markets can advance from here. Sentiment would need to be 85% to give a sell signal in the NTSM system and that would only be for the one indicator – not enough to create a sell overall. Sentiment is not a good indicator because it is not timely, but it does show a reduction in overly bullish attitudes by investors.
MARKET REPORT
-Tuesday, the S&P 500 was up about 0.3% to 2115 at the close.
-VIX was down about 5% to 12.41.
-The yield on the 10-year Treasury Note rose to 2.00%.
CORRECTION WATCH
-If VIX drops to 12 I’ll start to worry.
-The variability of market moves has dropped into the danger zone.
-As of Tuesday, there have still been only 48 “up-days” in the last 100-days and that is less than 50%. So by that measure, a correction (if it were to start now) would be starting from a weak point. That might suggest a bigger down-turn. Perhaps we’ll finally get that 10% correction on a closing basis that has been so elusive. There are often dual interpretations though, and only 48 up-days in the last 100 can be seen a positive indicator too.
-RSI is remained 63 (14-day, SMA) and that’s not close to an overbought indication.
-I suspect any correction is weeks away.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained to 53% at the close Tuesday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +40. (It was +76 Monday.) The 10-day moving average of change in the spread was minus-3. In other words, over the last 10-days, on average; the spread has declined by 3 each day.
Internals remained neutral on the markets, but deteriorated somewhat.
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
Tuesday, the NTSM analysis remained HOLD. PRICE, VOLUME, VIX 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 – the “S” fund in the TSP) continues to outperform the S&P 500. Since 1 February it is 2.8% ahead of the S&P 500. The S&P 500 Index has gained during earnings season since earnings were not as bad as feared. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 3.6% 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 exceptional for risk-free money.)
