“Murray Gunn, the head of technical analysis at HSBC Bank, is out with the call, which says the Dow has put it a massive "head and shoulders" top…Based, on this, Gunn says the Dow Jones index "could have put in an historic top, one that may well turn out to be more significant than the top in 2007.’ He adds that ‘as long as 18,137 holds as resistance the structure suggests that a new long-term and potentially powerful bear market has started; one that should end below the 2009 low…’” Story at…
http://www.businessinsider.com/hsbcs-technical-us-stock-market-top-2015-9
My cmt: In other words, if the Dow doesn’t break above 18,137, look out below! The Dow is now 16,510, about 10% below Gunn’s resistance level. In the past we have read any number of crash predictions. This is beginning to be a trend: analysts are making negative calls based on technical analysis of charts; and the charts look lousy.
MARKET REPORT / ANALYSIS
-Tuesday, the S&P 500 was down about 1.2% to 1943 at the close.
-VIX rose about 11% to 22.44.
-The yield on the 10-year Treasury fell to 2.13%.
Today’s (Tuesday’s) action again suggests the S&P 500 will retest the 1867 August low. The next lower test point would be 1820.
The Death Cross remains in effect since the 50-dMA is below the 200-dMA for the S&P 500. This is a long term signal for many. In 2011, the Death cross occurred about 7% before the low. In 2010, the Death Cross first occurred at the low so it was not a good signal then.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 48% Tuesday vs. 54% Monday. (A number below 50% is usually BAD news for the markets. On a longer term, the 50-day moving average of advancing stock was 47%. That’s remains a negative.
While I’m on the subject of long-term breadth (measured as % of stocks advancing), the 200-dMA of stocks advancing is 50.2%. I have data going back to November 2010. 50.2% of stocks advancing over the last 200-days is the lowest value I have recorded.
New-lows outpaced New-highs Tuesday. The spread (new-highs minus new-lows) was minus-202. (It was -63 Monday.) The 10-day moving average of change in the spread fell to -18 Tuesday. In other words, over the last 10-days, on average; the spread has DECREASED by 18 each day. The internals switched to negative on the markets.
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 long term indicator was HOLD. Volume, Sentiment and Price indicators are neutral. VIX is negative.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONG-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 70%
C-Fund (S&P 500): 15%
I-Fund (EFA): 15%
This is a conservative allocation. The number one priority now is return of capital; not return on capital.
When I do move back into stocks, I will initially invest a high percentage into stocks and phase back if the Index gets to prior highs.
