“The absence of a 2-day winning streak in S&P 500 in a month is a rare pattern that in the past has occurred during severe bear markets or large corrections…Thus, we may be in a large correction or on a downtrend already and the chart is an illusion, or dynamics have dramatically changed.” Commentary at…
http://www.priceactionlab.com/Blog/2015/12/pattern-sp500/
FOURTH QUARTER EARNINGS EXPECTED TO DECLINE (FACTSET)
Excerpt from Earnings Insight: “For Q4 2015, the estimated earnings decline is -4.3%. If the index reports a decline in earnings for Q4, it will mark the first the index has seen three consecutive quarters of year overyear declines in earnings since Q1 2009 through Q3 2009… At this point in time, 109 companies in the index have issued EPS guidance for Q4 2015…83 have issued negative EPS guidance…the percentage of companies issuing negative EPS guidance to date for the fourth quarter is 76% (83 out of 109). This percentage is above the 5-year average of 72%.” See the FACTSET Earnings Insight at…
http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_12.4.15/view
MARKET REPORT / ANALYSIS
-Monday, the S&P 500 fell about 0.7% to 2077 at the close.
-VIX rose about 7% to 15.84.
-The yield on the 10-year Treasury fell to 2.23. (The Bond Ghouls seem worried.)
Market Internals continue to look bad and are getting worse. Friday’s 2% up-day with deteriorating internals was a warning of a confused market. That’s not good for investors. Today the Internals continued down.
Other short term discussion follows:
The S&P 500 is 0.6% ABOVE the 200-dMA, but the slope of the 200-dMA remains DOWN as of Monday; that is signaling the trend is down, whether it will be long-term remains to be seen.
I have 2 indicators that have been very reliable recently, one based on breadth (but not the overbought/oversold ratio) and one based on smart-money; both are still suggesting further downside ahead.
My guess remains that the market continues down. There are several possible support levels. The 50-dMA on the S&P 500 is now 2045, but since that is below the 200-dMA it may be irrelevant. A 50% down retracement would put the market at about 1990. From the S&P 500 chart it looks like an important level is around 1930-1980. All of those levels will 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) fell to 47.3% Monday vs. 51.2% Friday. (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) remained negative Monday.
New-lows outpaced New-highs Monday. The spread (new-highs minus new-lows) was minus-288. (It was -149 Friday.) The 10-day moving average of the change in spread was -25 Friday. In other words, over the last 10-days, on average; the spread has decreased by 25 each day.
NTSM
Monday, the NTSM long term indicator was HOLD. The Price indicator is positive. Sentiment, VIX & Volume are neutral. I remain skeptical that this is a good time to get in. My prior blog posts explain the reasoning. The market needs
to break out higher before I will be convinced.
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 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.
