I am writing this on the flight from San Diego to
Atlanta. A friend said that when he dies,
he didn’t know if he would go to Heaven or Hell, but he was sure he would go
thru Atlanta first. I know how he feels.
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.9% to 4713.
-VIX dipped about 5% to 18.41
-The yield on the 10-year Treasury was down slightly to
1.746%.
The S&P 500 closed 0.7% above its 50-dMA.
Another false alarm?! I got faked out Monday when the
Index was down well below its 50-dMA mid-day.
There was a bearish head-and-shoulders pattern in the afternoon, but it didn’t
hold up. The S&P 500 then came roaring back late in the afternoon and only
lost about 0.1% for the day. The market went up after I predicted down - so are
the frustrations of a market-timer. That’s one reason that I only regularly
trade a small % of the total portfolio. (Big increases in stock investments are
reserved for high confidence bottoms.) There were some good bull-signs Tuesday.
Up-volume was 84% of total volume. If we see another high up-volume day Wednesday,
that would be a high confidence signal that the pullback has been cancelled and
it is time to buy the dip.
We’ve been watching the 100-dMA of breath (% issues
advancing on the NYSE) falling while the S&P 500 has been rising, showing a
clear bearish divergence since May. It’s still diverging, but today, the
100-dMA of breadth broke above its upper trend line so perhaps we may start to
see a more sustained up trend once this pullback issue is settled.
The McClellan Oscillator turned positive Tuesday so that
cancels the Hindenburg Omen from yesterday.
New-highs improved by 2.1 standard deviations. This is
bullish, but not a clear sign that the pullback is over. (We got one of those on 21 December when
there was an improvement of 3.7 std deviations.)
The daily sum of 20 Indicators improved from -8 to -4
today (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from -2 to -11 (The
trend direction is more important than the actual number for the 10-day value.)
These numbers sometimes change after I post the blog based on data that comes
in late. Most of these indicators are short-term so they tend to bounce around
a lot.
The Long Term NTSM indicator
ensemble remained HOLD. Price is Bullish; Volume, VIX & Sentiment are
Neutral.
Market Internals improved to HOLD.
As noted previously, we have
been watching the 50-dMA. The Index
bounced upward Tuesday after closing just below it Monday.
All-in-all, we got some fairly
bullish action. I didn’t see a real
strong signal that would allow us to say the pullback is over, but there were
plenty of weak signals. I am inclined to
wait another day before I decide whether to buy this dip.
