“Consumer confidence closed out 2015 on a high note amid solid job growth and falling gas prices. A closely watched index of Americans' outlook climbed to 96.5 in December…” Story at….
http://www.usatoday.com/story/money/2015/12/29/december-consumer-confidence/77993034/
DALLAS FED MANUFACTURING WORSE (Advisor Perspective)
“Perceptions of broader business conditions weakened markedly in December. The general business activity index has been negative throughout 2015 and plunged to -20.1 this month.” – Excerpt from the FED report. For details see Advisor perspectives at…
http://www.advisorperspectives.com/dshort/updates/Dallas-Fed-Manufacturing-Survey
RARIFIED AIR (Jesse Felder Tumblr)
This chart show days across the bottom (“X”-axis) vs. magnitude of the rallies on the “Y”-axis. See his blog (linked below) for discussion…
Chart from Jesse Felder’s
Tumblr at…
http://jessefelder.tumblr.com/MAINTAINING A LOW %-INVESTED IS A WISE MOVE NOW
The recent correction is a good example. I was 50% invested and moved to 30% invested as the S&P 500 plummeted, but really, I got out too late. Since I started with a low %-invested in stocks I made out OK. For example, if the correction had been 10% top to bottom, and I sold at the bottom, and bought back in at the top, I would have underperformed the S&P 500 by 2% {10% x (50%-30%)=2%}. In fact, I did slightly better under-performing the Index by about 1.5%. With a little luck, I could have easily come out ahead – in a significant downturn, I will.
MARKET REPORT / ANALYSIS
-Tuesday, the S&P 500 was up about 1.1% to 2078 at the close.
-VIX fell about 5% to 16.08.
-The yield on the 10-year Treasury rose to 2.31.
“As an investor, you should remember that making money in the market is only one-half of the job. Keeping it is the other.” – Lance Roberts
Market Internals remained neutral. Up-volume is still a drag on the indicator, but overall, market internals look really good. In fact, Breadth is looking too good since it is now significantly overbought.
As noted, the Overbought-Oversold Index (Advance-Decline Ratio) remains OVERBOUGHT and has been for the past 2-days. This is one negative for the bulls.
My new “Money Trend” indicator tracks Up-$ vs. Down-$ vs the S&P and it remains bullish. It bounced up nicely Tuesday and remains bullish.
Until the market internals show more signs of distress, I remain “in”, but I am only willing to invest 50% in stocks since we are close to the all-time high of 2131. Keep risk low. If I get a short term sell signal, I will drop back to 30% invested with long-term money.
The Index is approaching the upper trend line that is now about 2100. Today was not a statistically-significant day so no reversal appears imminent. If we see a huge up-day, say in the 1.5%-range, I’d be very tempted to sell stocks back to 30%-invested. My strategy is to remain very conservative. The S&P 500 peaked in Mid-May has not been able to break higher in the past 7-months. That looks like a top to me, so I’ll be using short-term indicators for long-term money. That may be too conservative for many, but at least it is a strategy. Be warned though: unless there is a correction, this strategy will underperform a buy-and-hold strategy.
MARKET INTERNALS (NYSE DATA)
(I am getting data from various sites. Some of the numbers are subject to minor revision so the previous day’s numbers may be slightly different than reported yesterday.)
The 10-day moving average of the percentage of stocks advancing (NYSE) rose to 62.5% Tuesday vs. 57.7% Monday. (A number above 50% is usually GOOD news for the markets. At this level the news is almost too good. It is pushing the Advance-decline ratio well into overbought territory.) 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) was positive and improved.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was +67. (It was +28 Monday.) The 10-day moving average of the change in spread was +69 Tuesday. In other words, over the last 10-days, on average; the spread has INCREASED by 69 each day. Market Internals remained neutral Tuesday.
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, Sentiment, Price, Volume & VIX indicators are neutral.
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 17 Dec I increased my invested position in my retirement account to 50% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP). 50% is fully invested for me now; this is not the time for heroics, or accepting too much risk. I may not maintain a bullish stance for long; I’ll just see what the indicators have to say and I will move on the short term indicators. I am not bullish in the long-term.
See “Why the Bull Market May be Dead” in my 14 December blog at…
http://navigatethestockmarket.blogspot.com/2015/12/stocks-are-topping-time-to-sell-hussman.html
