“At the March meeting, FOMC officials indicated that two rate hikes are likely this year. Yellen's remarks indicate her opinion has not changed since then. "That's still her sense. She's still cautiously optimistic about the economy," said David Blitzer, chairman and managing director at S&P Dow Jones Indices.” Story at…
http://www.cnbc.com/2016/06/06/janet-yellen-probably-just-signaled-two-interest-rate-hikes-for-this-year.html
My cmt: Maybe, the Indeces dipped during the speech, but recovered to new highs on the day.
The Simple Reason The Fed Is Entirely Dow-Dependent Rather Than Data-Dependent (Jesse Felder.tumblr.com)
Cartoon and commentary at…http://jessefelder.tumblr.com/post/145271554250/the-simple-reason-the-fed-is-entirely
MARKET REPORT / ANALYSIS
-Monday, the S&P 500 was up about 0.5% 2109.
-VIX was up more than 1% to 13.65 at the close.
-The yield on the 10-year Treasury rose to 1.72%.
Interesting that the VIX went up suggesting the options boys aren’t buying a continuation of the rally.
Stocks on the NYSE remain significantly overbought per the tried and true NYSE Overbought/Oversold Ratio (based on advance decline data) and that’s a bearish indication. The 10-dMA of closing Tick has also climbed to 297 and that’s in the range of “overbought” using tick as an indicator (as suggested by Tom McLellan a few months back.) The S&P 500 is not overbought using RSI. As we have often observed, stocks can remain overbought for some time, usually longer than you think possible. I have been surprised by this rally even to the extent that I ignored my system’s buy signals…serves me right. It would have been nice to buy the bottom back in February.
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile and it is flat, Monday, and that's neutral (looks like it’s rolling over to me). I continue to hold short positions mostly in SH and some in QID in the trading portfolio only. Those will have to go if the market exceeds my pain-target of 2110 on the S&P 500.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 62.2% Monday. It was 63.2% Friday. A number above 50% is usually GOOD news for the markets; now, the value is too good suggesting a pullback is overdue.
On a longer term, the 150-day moving average of advancing stocks rose to 52.1%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) was up and remained positive – a bullish indicator in the short-term.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) was a high +199 Monday. (It was +233 Friday). Tick is close to signaling “overbought” on a 10-day basis. The 10-day moving average of the change in spread slipped to +18. In other words, over the last 10-days, on average; the spread has increased by 18 each day. Market Internals remained positive on the market.
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.
Monday, the Volume, VIX & Sentiment indicators were neutral. The Price indicator (measuring the size of up vs down moves) was positive. The long-term NTSM indicator switched to BUY. I ignored Buy signals back in April and that was a mistake; still, I’ll wait for further data. Also, I feel that the S&P 500 must get at least to 2110 before I even consider adding to my stock allocation. Steve Grasso, trader and CNBC contributor, recommends waiting for new highs before moving back in and there is wisdom in that advice.
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. If the S&P 500 index closes above 2110, I plan to add to my stock allocation.
The S&P 500 peaked in Mid-May 2015 and has not been able to break higher in the past 12-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
