“…with market internals presently negative and credit spreads continuing to widen, the market remains vulnerable to an air-pocket, panic or crash, here and now…our expectation is that the completion of the current market cycle will involve a market loss of at least 40-55%; a loss that would merely take the most historically reliable valuation measures to run-of-the-mill pre-bubble norms, not materially below them…Investors should remember from the 2000-2002 and 2007-2009 collapses that in the absence of investor risk-seeking - as conveyed by market internals - even aggressive Fed easing does not support stocks.” – John Hussman, PhD. Weekly Market Commentary from Hussman Funds at…
http://www.hussmanfunds.com/wmc/wmc151130.htm
DON’T BE TOO AGGRESSIVE (CNBC)
"I would tell people not to be too long here, not to be too aggressive on the market," said Glazer [portfolio manager Larry Glazer], whose Boston-based firm manages $2 billion in assets. "…the easy money has been made." – Larry Glazer. Story at…
http://www.cnbc.com/2015/11/30/2016-wont-be-all-you-can-eat-market-fund-manager.html
DON’T BE FOOLED BY CHINA BEAR TRAP (CNBC)
I agree. The China bear is not done. Story at…
http://www.cnbc.com/2015/11/30/dont-be-fooled-by-chinas-bear-trap-commentary.html?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=103204019
“WHO EARNS MINIMUM WAGE?” (MarketWatch)
FYI: Story at…
http://www.marketwatch.com/story/who-earns-the-minimum-wage-the-facts-2015-11-10
MARKET REPORT / ANALYSIS
-Monday, the S&P 500 was down about 0.5% to 2080 at the close as it closed near the low for the day.
-VIX rose about 7% to 16.13. (The Options Boys must be on vacation.)
-The yield on the 10-year Treasury dipped to 2.22.
My $-flow analysis from last Wednesday was flawed. If one wants to track money flow, just divide the change in value of the Index (proxy dollars) by the total volume and you get $ per share. Then multiply that result by the up-volume or down-volume and those are the $-up and $-down. It is just a volume analysis multiplied by a constant (the Index value). That constant is cancelled out if one calculates a spread between the up and down volume or a ratio; therefore, tracking “volume-only” is just as valid for most purposes of technical analysis. I have been working on new indicators since I finished some reports on technical analysis; some good results and others (like the above) not so good.
Breadth (%-of stocks advancing) now is reaching an extreme that may be too good on a 10-day basis. At the top in 2010, the 10-dMA of %-advancing was 59% and the data is almost there now. There are other measures of breadth that look toppy too. In part, that’s why I have ignored some my other “standard” signals that have been more positive. Breadth is “overbought” on the tried and true Adv/Dec Ratio analysis method as of Friday and Monday. RSI was overbought at the recent 3 Nov top of 2110.
The first few days of a new month are some of the most bullish days on the stock market. That’s because most investors set their mutual fund purchases early in the month.
I wouldn’t be surprised to see the markets pullback some (perhaps after an up-day tomorrow) given oversold conditions and chart patterns. We’ll see.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 57.5% Monday vs. 56.9% Friday. (A number above 50% is usually GOOD news for the markets. On a longer term, the 150-day moving average of advancing stocks dipped to 49.2%. A value below 50% indicates a down trend.
The McClellan Oscillator (a Breadth measure) pulled back some, but it remained positive Monday.
New-highs outpaced New-lows Monday. The spread (new-highs minus new-lows) was +22. (It was 41 Friday.) The 10-day moving average of the change in spread was +22 Monday. In other words, over the last 10-days, on average; the spread has increased by 22 each day. The internals remained 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
Monday, the NTSM long term indicator was BUY. The Price, Volume & VIX indicators are positive. Sentiment is neutral. I remain skeptical that this is a good time to get in. My prior blog posts explain the reasoning.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONAll cash: G-Fund (Cash, risk-free yielding 2.1% over the last 12-months): 100%
I made a rather impulsive sell decision. For my reasons (or lack of reason) see “My Invested Stock Position” in my prior blog at...
http://navigatethestockmarket.blogspot.com/2015/11/factset-earnings-cass-freight-index.html
There have been enough major top indicators recently to warrant more caution than usual.
One needn’t be “all-out” to be well protected if there is a bear market. In fact, I don’t recommend it. For example: With 30% invested in the stock market, one would only lose 15% of the portfolio if the market were to be cut in half; one would have plenty to invest at the bottom and 30% in stocks hedges the bet if the markets go up.
I have been considering increasing stock-investments, but I’d like to see more price movement first.
