“New orders for U.S. factory goods recorded their biggest increase in eight months in March, boosted by demand for transportation equipment, but the underlying trend remained weak against the backdrop of a strong dollar…New orders for manufactured goods increased 2.1 percent, the largest gain since July last year, after a revised 0.1 percent dip in February. It was the first rise since last August.” Story at…
http://www.reuters.com/article/2015/05/04/us-usa-economy-factory-idUSKBN0NP19F20150504
TIME TO BUY (CNBC)
“The Dow Jones Industrial Average briefly turned negatively this week, as global growth worries weighed on stocks. Rather than run from the selling, however, one highly regarded technician is using it as an opportunity to buy stocks.” Story at…
http://www.cnbc.com/id/102638640
…or the following commentary: Don’t by now….
THE BUBBLE IS NOW (Hussman Funds)
“Learn this lesson during the bubble, or you’ll learn it during the crash: what distinguishes a bubble that continues higher from a bubble that crashes with little additional warning is the condition of investor risk preferences as inferred from market internals, credit spreads, and other risk-sensitive measures. I’ve learned that lesson twice in my investment career – once during the late-1990’s bubble when we adapted by introducing those measures of internals, and again in the recent half cycle since 2009 because the ensemble methods that emerged from our stress-testing against Depression-era data didn’t emphasize those features strongly enough (we ultimately imposed them as an overlay in mid-2014). Overvaluation always matters for long-term returns – it’s just that it only reliably matters over the shorter-run once market internals indicate a shift toward risk-aversion. At that point, overvaluation matters with a vengeance, though the precise timing can still be unpredictable and abrupt. That’s the risk we observe here. Our valuation concerns won’t vanish if market internals and credit spreads were to improve materially, but the immediacy of those concerns would be deferred.” – John Hussman, PhD. Weekly market commentary at…
http://www.hussmanfunds.com/wmc/wmc150504.htm
CASH ON THE SIDELINES – FORGEDDABOUTIT! (MarketWatch)
“…as a share of the total market cap of the entire stock market, current money market fund assets are very low by historical standards: 11.3%. Before the 2007 market top, the lowest this share got was 12.7%. Davis calculates that the current percentage is in the historical zone associated with annualized stock market returns of only 0.4%.” Story at…
http://www.marketwatch.com/story/a-bullish-argument-for-stocks-turns-out-to-be-wrong-2015-05-01
This supports the bear argument; not the bull.
MARKET REPORT
-Monday, the S&P 500 was up about 0.3% to 2114 at the close.
-VIX was up about 2% to 12.92.
-The yield on the 10-year Treasury Note rose to 2.14%.
CORRECTION?
As I wrote last week, Friday’s action looked like a normal bounce from the 50-dMA. Monday, we got some follow through to confirm that notion, so no correction. I’ll go back to my prior comment: I think a pullback is coming, but it is probably weeks away.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 50.2% at the close Monday. (A number above 50% is usually GOOD news for the markets.) New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +37. (It was +9 Friday.) The 10-day moving average of change in the spread remained zero. In other words, over the last 10-days, on average; the spread has been flat each day.
Internals switched to neutral on the markets.
NTSM
Monday, 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, mostly 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 1.7% ahead of the S&P 500. The S&P 500 Index has gained during earnings season since earnings were not as bad as feared. The Completion Index was outperforming the S&P 500 by nearly 5% a month ago. Since 1 March the Euro-Pacific ETF (EFA) (“I”-fund) is 2.7% 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.)
