"As you will notice, the reflexive rally, and subsequent failure, have tracked the original predictions very closely up to the point. With the market once again very oversold on a short-term basis [last Thursday], it is likely that the markets could manage a weak rally attempt over the next few days. The good news is that such an attempt will provide individuals another opportunity to reduce portfolio risk accordingly." – Lance Roberts. Commentary at…
http://streettalklive.com/index.php/blog.html?id=2924
PART TIME EMPLOYMENT REMAINS HIGH (Advisor Perspectives)
“…[In] 1968…only 13.5% of US employees were part-timers. That number peaked at 20.1% in January 2010. The latest data point, over five years later, is only modestly lower at 18.1% last month. If the pre-recession percentage is a recovery target, we're just above half-way there.” Commentary at…
http://www.advisorperspectives.com/dshort/updates/Full-Time-vs-Part-Time-Employment.php
MARKET REPORT / ANALYSIS
-Tuesday, the S&P 500 was down about 0.4% to 1980 at the close.
-VIX finished down about 0.7% at 19.40.
-The yield on the 10-year Treasury slipped to 2.04%.
Market Internals improved today while the S&P 500 declined. I am more concerned about the declining Price in the Index. The Internals can give false signals when there are back-and-forth moves in Price. As seen in prior corrections, a positive turn in the Market Internals does not signal an all-clear in the correction, even when it occurs late in the correction.
One of the CNBC announcers was stressing that the Index was above the 50-dMA. Huh? It wasn’t yesterday and it isn’t today (Tuesday). Perhaps they were referring to the DOW instead of the S&P 500?
Speaking of moving averages, the 5-10-20 Timer could signal a buy soon. That could confirm the Market Internals and give a buy signal should we have some further up-days ahead. It compares the 5-dMA, 10-dMA to the 20-dMA.
Based on my note yesterday, I still think the Index needs to test the 1868 prior low before we will have a better idea about the future of the market.
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.
This correction is very similar to the 2011 correction. In 2011, the correction lasted 108-trading-days. The current correction has lasted 95-trading-days so far (as of Tuesday), assuming it isn’t over.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 53% Tuesday vs. 49% Monday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 50-day moving average of advancing stocks rose to 49.7%. That’s remains a negative.
New-highs outpaced New-lows Tuesday. The spread (new-highs minus new-lows) was +8. (It was +30 Monday.) The 10-day moving average of the change in spread rose to +21 Tuesday. In other words, over the last 10-days, on average; the spread has risen by 21 each day. The internals switched to positive 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. The Price, Volume & Sentiment indicators are neutral. The VIX indicator 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.
If I am able to identify a BUY point before the close when the Index is in the 1868 region, I will post it late in the day.
