“Last week, market conditions joined the same tiny handful of extremes that defined the 1929, 1972, 1987, 2000 and 2007 market peaks.” – John Hussman, PhD, Weekly Market Commentary
TOM LEE BEARISH? CIRCLE THE WAGONS
“…we are scared about the month of August (4 of 6 most recent Augusts have been big down months) and have noted that in our recent commentary.”- Tom Lee, Fundstrat Global Advisors Founder, Managing Partner & Head of Research
[and he isn’t alone…]
“Goldman's David Kostin predicted that "we continue to expect the market will experience a pullback of 5%-10% during the next few months before ending the year at 2100.”
http://www.zerohedge.com/news/2016-07-22/markets-biggest-permabull-scared-about-month-august
My cmt: This is a surprise because Tom Lee has been a bull for longer than Hussman has been a bear. Lee went on to say that he is bullish overall; he just expects a drop in August partly due to recent history.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 down about 0.3% to 2168.
-VIX rose about 7% to 12.87.
-The yield on the 10-year Treasury remained 1.57%.
Monday’s value of RSI was 83, indicating “overbought” for the S&P 500. The Index is no longer “overbought” when using the old stand-by Advance-Decline Ratio. More traders seem to use the RSI so it is worth noting.
Market Internals on the NYSE are falling faster that the S&P 500 and this usually indicates a pullback is coming.
I’m still guessing we see a pullback in the 4-5% range. I remain Bullish in the intermediate term; bearish short-term. A retracement down is due now.
MONEY TREND & SHORT TERM TRADING
My short-term Money Trend indicator can be volatile; Monday it remains pointing down; it is bearish.
Same note as previous: I added to short positions last Monday using 2x short ETF’s. I’ll cover recent purchases unless the S&P 500 falls; I’ll begin to cover shorts I have held longer. As I said before, I don’t expect to short for long; the trend is up. I have violated too many trading rules by staying short too long. (It was my intention again to cover today, but again I was tied up all day and didn’t have a chance. Apparently, Grandchildren are more important than the market; but really, internals are deteriorating and a drop seems imminent.)
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 54.7% Monday. It was 57.8% 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 53.9%. A value above 50% generally indicates an up-trend. The McClellan Oscillator (a Breadth measure) fell from +17 (percentage calculation method) to -4.
New-highs outpaced New-lows. The spread (new-highs minus new-lows) fell to +166 Monday. (It was +211 Friday.) The 10-day moving average of the change in spread dropped to minus-17. In other words, over the last 10-days, on average; the spread has decreased by 17 each day. Market Internals remain neutral 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).
LONG TERM INDICATOR
Monday, the Price indicator was positive; Sentiment, Volume and VIX indicators were neutral. The long-term indicator is HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATIONOn 12 July I increased my invested position in my retirement account to 25% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP). I added to that position Thursday 21 July bringing my invested total up to 40% in stocks. I expect to add more stocks should we get the anticipated pullback.
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions. I’m following my system now, especially since the Index has climbed above my initial sell-point of 2100 on the S&P 500 back in November 2015.
