"…fiscal expansion [in the Trump Budget] is probably
the most foolhardy escapade in modern economic policy, and the timing of the
fiscal stimulus that is utterly ridiculous and will only accelerate the
collapse of US financial markets as the Fed hikes rates even more quickly.”
Albert Edwards, Society General. [Rising interest rates are a serious problem.
Here’s the chart…]
Commentary at…
JOHN HUSSMAN, PHD, MARKET COMMENTARY EXCERPT (Hussman
Funds)
[Commentary published in early February.]
“The chart below shows our current best-fit
parameterization of Sornette’s log-periodic structure, applied to the S&P
500 Index. Notably, unless we allow for the slope of the current market advance
to become quite literally infinite, it’s impossible to closely fit the current
price advance without setting the “finite-time singularity” – the point at
which instability typically emerges – within a few days of the present date.
Notably, the singularity is not the date of a crash. Rather, it’s the point
where the pitch of the advance reaches an extreme, which may simply be an
inflection point (as has been the case for other structures in recent years) or
a pre-crash peak.” – John Hussman.
Commentary and Chart at…
[This does not give the dates of a crash nor does it
suggest that the recent market trouble is part of a crash. It does show we need
to be cautious.]
CORRECTION: NOT OUT OF THE WOODS YET (Real Investment
Advice)
“While the immediate consensus is the ‘bear market of
2018’ is now over, there are several important points…that
should be considered.
-
…the upper red “trendline” may provide some
overhead resistance temporarily and is worth watching closely.
-
While the market did get oversold on a
short-term basis, which suggested a bounce was likely, the longer-term
overbought condition, and subsequent ‘sell signal’ remain intact.” – Lance
Roberts. Commentary at…
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 was down about 0.6% to 2716.
-VIX was UP about 6% to 20.6.
-The yield on the 10-year Treasury rose to 2.89%. (Yields
have been rising since September. This isn’t good for the markets.)
The S&P 500 remains down 5.4% from its recent high;
this is day 17 in the correction. If the bottom was 8 Feb (the recent low),
then this “correction” lasted 10-days top to bottom. A 2-week correction is awfully short and
difficult to believe.
My sum of 17 Indicators improved from +3 to +6 today – a
bullish indication. The smoothed version has turned up and is bullish too. I’d
be surprised if Indicators weren’t turning more positive after the 5% bull-move
we’ve had recently. At this point the chart and 50-dMA is more important than
the indicators.
We still can’t guess whether there will be a retest of
the low or not. A typical correction includes a waterfall collapse (it seems to
be over) followed by a bounce (we got the bounce), a lot of choppiness and then
a retest of the low over a period of about 50-trading days. We’ll see. It is
all up to the chart. Friday the S&P 500 was sitting slightly (0.3%) above
50-dMA; now it’s 0.4% below it. The
50-dMA is a critical point for the Index. If we can break significantly above
the 50-dMA and stay there it would suggest this correction is more likely to
end quickly.
TODAY’S RANKING OF
15 ETFs (Ranked Daily)
In corrections
this chart may be less valuable – all stocks are falling.
The top ranked ETF receives 100%. The rest are then
ranked based on their momentum relative to the leading ETF. While momentum isn’t stock performance per
se, momentum is closely related to stock performance. For example, over the 4-months
from Oct thru mid-February 2016, the number 1 ranked Financials (XLF) outperformed
the S&P 500 by nearly 20%. In 2017 Technology (XLK) was ranked in the top 3
Momentum Plays for 52% of all trading days in 2017 (if I counted correctly.)
XLK was up 35% on the year while the S&P 500 was up 18%.
*For additional background on the ETF ranking system see
NTSM Page at…
TODAY’S RANKING OF THE DOW 30 STOCKS (Ranked Daily)
In corrections
this chart may be less valuable – all stocks are falling.
The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
*I rank the Dow 30 similarly to the ETF ranking system.
For more details, see NTSM Page at…
TUESDAY MARKET INTERNALS (NYSE DATA)
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).
LONG TERM INDICATOR
Tuesday, Volume
was positive; VIX was negative; Sentiment and Price were neutral.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I remain 40%
invested in stocks and 60% in cash as of 31 Jan (A comparable TSP allocation
would be 40% in the S&P 500 Index fund (C-Fund) with the remainder 60%
G-Fund (Government securities). For non-Government employees holding short-term
bonds would be OK rather than 60% cash.
