“The CNBC Rapid Update shows a sharp decline in the outlook for first quarter GDP from a high of 2.3 percent to just 0.6 percent. Weakness has come from several sectors, led by trade but also including retail sales, inventories and manufacturing.”
Story and Chart from…http://www.cnbc.com/2016/04/11/outlook-dims-for-q1-gdp.html
Steve Liesmnan, CNBC economist, noted that it was significant that declines occurred in all categories of the economy. As I noted here yesterday, the Fed’s GDPNow estimate is for Q1GDP of 0.1%
GLOBAL DOW DEMONSTRATES CRITICAL POINT FOR THE MARKEST
(CNBC)
“Not much money directly tracks the Global Dow. But there
is still good reason for traders to watch it closely…"It's become very
instructive as a 'tell' to the direction of global equities in general, and
potential inflection points." - Dana Lyons, technical analyst and
investment advisor. Chart and commentary at…http://www.cnbc.com/2016/04/08/stocks-around-the-world-are-hitting-a-wall-technician.html
My cmt: The world’s markets are below the previous up-trend and are now in a downtrend. The index needs to break above the old trend line before any correction can be declared over. (The ticker symbol for the Global Dow is GDOW.)
WHAT DO TOPS LOOK LIKE? (Hussman Funds)
Excerpted from the Hussman Weekly Market Comment:
“Visualizing this process of top-formation from a historical standpoint provides a useful reminder that even the worst bear market retreats across history were generally preceded by quite an extended period of choppy sideways market action. Bill Hester proposed the following chart, which uses daily S&P 500 data from 1972-1974, 2000-2002, 2007-2009, and the period since late-2014. The chart isn’t intended as a forecast of any sort, but is instead a reminder that the kind of market action we’ve observed over the past year is consistent with what has regularly been observed in other contexts where valuations were extreme and tepid market internals suggested growing risk-aversion among investors. Each instance included a long period of choppy top-formation over which the market was essentially unchanged.” – John Hussman, PhD. Weekly Market Commentary at
http://www.hussmanfunds.com/wmc/wmc160411.htm
http://www.hussmanfunds.com/wmc/wmc160411.htm
For further similar discussion, see my blog comment under Paragraph “Bear Market or Bull” from 23 March at…
http://navigatethestockmarket.blogspot.com/2016/03/new-home-sales-crude-inventories.html
It is very unusual when there has been a long period without much change in price (as there has been over the last 10-months); in recent history this has almost always preceded a crash.
MARKET REPORT / ANALYSIS
-Monday, the S&P 500 was down about 0.3% to 2042 at the close.
-VIX rose about 6% to 16.26.
-The yield on the 10-year Treasury rose slightly to 1.72%
MONEY TREND & SHORT TERM TRADING
The short-term Money Trend indicator remains negative on the market and suggests further downside ahead. I continue to hold short positions mostly in SH and some in QID. For now I am following the Money Trend indicator rather than market internals below.
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 53.2% Monday. It was 53.3% Friday. (A number above 50% is usually GOOD news for the markets.)
On a longer term, the 150-day moving average of advancing stocks remained 51.6%. A value above 50% generally indicates an up-trend, but the slope of the 200-dMA is still down, so the trend must still be considered down. The McClellan Oscillator (a Breadth measure) improved, but remained negative on the markets.
New-highs again outpaced New-lows. The spread (new-highs minus new-lows) was +102 Monday. It was (+90 Friday). The 10-day moving average of the change in spread dipped to +1. In other words, over the last 10-days, on average; the spread has increased by 1 each day. Market 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, Price & VIX were positive. Sentiment & Volume were neutral. The long-term NTSM indicator is BUY. I have not followed the guidance yet. My numbers suggest that the Index is topping out. I have been saying that for a while as the market has moved up; but there are some topping indicators (RSI & the Breadth Index Top Indicator) that suggest a top has occurred. We’ll see.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONOn 30 Dec I reduced my invested position in my retirement account to 30% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP) and on 15 Jan I reduced stock allocation to zero in long-term accounts.
The S&P 500 peaked in Mid-May and has not been able to break higher in the past 10-months. That looks like a top to me. 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
