Goldman Forecasts Flat S&P 500…Junk Bond Warning…Stocks are Too High? – Yes, if earnings have peaked…Earnings Report

JUNK BOND WARNING (MarketWatch)
“High-yield corporate bonds may present the next financial crisis for markets,” says …Jeffrey Gundlach, chief investment officer and founder of investment firm DoubleLine Capital, told Wall Street Week on Sunday…The risk is there could be a run on the bond funds, causing further downward price movement. A lot of investors don’t like Treasurys. They’ve been searching for yield and throwing caution to the wind,” said Gundlach…How much should investors worry about this potentially looming crisis? Gundlach said as this may not be an issue for 18 months to two years, they don’t need to “go out and make radical changes today.” Story at…
http://www.marketwatch.com/story/jeff-gundlach-issues-ominous-warning-for-junk-bond-market-2015-04-20?dist=afterbell
 
GOLDMAN SACHS FORECAST (Business Insider)
12-Month S&P 500: 2125 (1% above the current level.)
12-Month Gold: 1100 (Down 8%.)
GDP: 2015: 2.8%...2016: 2.9%
Full forecast at…
http://www.businessinsider.com/goldman-sachs-global-macro-forecasts-2015-4
 
IF EARNINGS HAVE PEAKED – STOCKS ARE TOO HIGH (MarketWatch)
“All told, there is a good chance earnings will actually shrink this year. We think the market is too high if earnings have, in fact, peaked for the cycle, and we have reduced our net exposure by adding more shorts…” – David Einhorn, Greenlight Capital. Story at…
http://www.marketwatch.com/story/einhorn-stocks-are-too-high-if-earnings-have-peaked-2015-04-20?dist=beforebell
 
EXCERPT FROM EARNINGS INSIGHT (FACTSET)
“With 11% of the companies in the S&P 500 reporting actual results for Q4 to date, more companies are reporting actual EPS above estimates (77%) compared to the 5-year average, while fewer companies are reporting actual sales above estimates (46%) compared to the 5-year average. In aggregate, companies are reporting earnings that 5.8% above the estimates…Looking at future quarters, analysts are expecting year-over-year declines in earnings to continue through Q215, and year-over-year declines in revenue to continue through Q315. Despite the estimate reductions, analysts are looking for record level EPS to resume in Q3 2015…The forward 12-month P/E ratio is 17.0, which is above the 5-year and 10-year averages.” Commentary at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_4.17.15/view
 
MARKET REPORT
-Tuesday, the S&P 500 was Down about 0.2% to 2097 at the close. 
-VIX was down about 0.4% to 13.25.
-The yield on the 10-year Treasury Note rose to 1.91%.
 
It is disconcerting to see the S&P 500 hanging around 2100 again.  Market Internals haven’t turned positive and that’s a worry too. Still, once again there have been only 47 up-days in the last 100-days and that sort of negative stat usually happens near or after a bottom.  For a discussion of this stat, see my blog on Friday, paragraph “Stat of the Day” at…
http://navigatethestockmarket.blogspot.com/search?updated-max=2015-04-20T17:09:00-04:00&max-results=7
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) remained 52% 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 +67. (It was +42 Monday.)  The 10-day moving average of change in the spread was minus-2.  In other words, over the last 10-days, on average; the spread has DECREASED by 2-each day.
Internals remained neutral on the markets Monday and only Breadth is 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 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 4.1% ahead of the S&P 500. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 2.4% 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, however, the “G”-fund did return 2.2% over the last 12-months and that is exceptional for risk-free money.)