“Bottom line, as circumstances change, so should you. I believe chinks in the bullish armor are becoming more pronounced and in the context of the third longest bull market of all time, investors should now be watching their backs and playing some defense.” - Peter Boockvar, chief market analyst for The Lindsey Group. Commentary at…
http://www.cnbc.com/2015/11/20/the-bull-market-is-over-commentary.html
MARKET REPORT / ANALYSIS
-Friday, the S&P 500 was up about 0.4% to 2089 at the close.
-VIX fell about 9% to 15.47.
-The yield on the 10-year Treasury rose to 2.26.
Small and mid-cap stocks continue to underperform. CNBC reported that the NASDAQ 100 is rallying on the backs of 2-stocks, Amazon and Google, now Alphabet. Yesterday they reported that the S&P 500 would be down on the year but for 4-stocks. This is a very narrow market and that is typical near a top although it doesn’t indicate that this is necessarily a top.
This past Wednesday there was a volume reversal that suggested further gains. If this current rally (that started Monday) fails without making a new high, I think that would be a bearish sign. As it is, we are left with a bearish head and shoulders pattern Friday. The period right around the Holiday, including the first of the month, is bullish so we’ll see how that plays out.
After the Holiday, my guess is that the market moves down. It may retest the August low of 1868. Other possible support levels are: The 50-dMA on the S&P 500 is 2008. A 50% down retracement would put the market at about 1990. The chart looks like an important level is around 1930-1940. All of those levels should be watched for a possible buy signal. A retest of the 25 Aug low is still possible.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 47.4% Friday vs. 45.3% Thursday. (A number below 50% is usually BAD news for the markets. On a longer term, the 150-day moving average of advancing stocks remained 49.2%. A value below 50% indicates a down trend.
The McClellan Oscillator (a Breadth measure) turned positive Friday, but just barely.
New-lows outpaced New-highs Friday. The spread (new-highs minus new-lows) was minus-36. (It was -38 Thursday.) The 10-day moving average of the change in spread was minus-2 Friday. In other words, over the last 10-days, on average; the spread has decreased by 2 each day. The internals remained neutral on the markets because up-volume is now increasing on a smoothed 10-day basis.
NTSM
Friday, the NTSM long term indicator was BUY. The Price & VIX indicators are positive. Sentiment and Volume indicators are neutral. I remain skeptical that this is a good time to get in. My prior blog posts explain the reasoning. My Price indicator in the NTSM system often is bullish at a top since it is a trend follower.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
All cash: G-Fund (Cash, risk-free yielding 2.1% over the
last 12-months): 100% I made a rather impulsive 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. 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.
