Leading Economic Indicators…Michigan Sentiment…CPI…Stock Market Stat of the Day: Crash warning? Probably not.

LEADING ECONOMIC INDICATORS (Advisor Perspective)
"The Latest Conference Board Leading Economic Index (LEI) for March…rose 0.2 percent, which follows a 0.1 percent February increase…The latest number came in below the 0.3 percent forecast by Investing.com.” Story at…
http://www.advisorperspectives.com/dshort/updates/Conference-Board-Leading-Economic-Index.php
 
MICHIGAN SENTIMENT (WSJ)
“The University of Michigan final March sentiment index registered at 93.0…below the final February reading of 95.4. ”Importantly, most of the recent variation was among lower-income households, whose budgets are more sensitive to higher utility costs and disruptions in work hours,” said Richard Curtin, chief economist at Michigan’s Surveys of Consumers. By contrast, middle- and upper-income households registered gains in confidence…” Story at…
http://www.wsj.com/articles/march-university-of-michigan-consumer-sentiment-index-at-93-0-1427465660
 
CPI (USA Today)
"Rising gas prices in March led to a slight increase in inflation, a sign that some of the broader economic impact from cheaper oil is fading. The Labor Department says the consumer price index rose 0.2% in March.” Story at…
http://www.usatoday.com/story/money/business/2015/04/17/consumer-price-index-cpi-inflation/25925341/
 
MARKET REPORT
- Friday, the S&P 500 was down about 1.1% to 2081 at the close. 
-VIX was up about 10% to 13.89.
-The yield on the 10-year Treasury Note dipped to 1.87%.
 
STAT OF THE DAY: GOOD NEWS? PROBABLY, BUT IF NOT, IT COULD BE A CRASH WARNING.
The stat of the day today is based on the percentage of up-days over the last 5-months.  Keep in mind that a “normal” bull market is up much more than half of the time so it would be normal for the % of up-days to be around 60+%.  A number below 50% is rare. Today the number was 47%. In other words in the last 5-months (100-days) there were only 47 up-days. While that doesn’t seem all that unusual, one needs to go back 2-1/2 years to find a value that low.  That was about 7-weeks AFTER the low of 1278 at the bottom of the year-2012, 10%-correction. To find another period when the value was that low, one would need to go back 4-1/2-years to September of 2010.  That was about 8-weeks AFTER the year-2010, 16%-correction low.  What’s it mean now?
 
Today, this low value of 47 up-days over the last 100-days probably indicates a buying opportunity even though it is not an exact bottom indicator; if it turns out otherwise, this could be one hell of a correction.
 
STATISTICALLY SIGNIFICANT DAY
Today’s large move down (exceeding my statistical measures for a statistically significant day) implies Monday is likely to be an up day about 62% of the time.
 
RSI (14-day, SMA)
Relative Strength on the S&P 500 is in neutral territory so there is no confirmation in RSI that yesterday was a top (as called by several pundits today) and there was late-day-buying.  That’s usually a bullish indicator, but not necessarily right away.

BULLISH TRADE
I remain bullish. I took a small position in a 2xNas100 ETF (QLD) for a short term trade. If the markets move up more than 1% on Monday I’ll take profits in this trade Monday; otherwise I’ll let it run.  If the market goes down Monday I’ll be out at a loss.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 52% at the close Friday.  (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Friday. The spread (new-highs minus new-lows) was +8. (It was +57 Thursday.)  The 10-day moving average of change in the spread was minus-9.  In other words, over the last 10-days, on average; the spread has DECREASED by 9-each day.
Internals switched to neutral on the markets Friday 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         
Friday, 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% ahead of the S&P 500. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 2.5% 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.)