Navigate the Stock Market

Wednesday, January 8, 2014

ADP Employment Report…Correction…Federal Reserve Will Continue Taper

ADP EMPLOYMENT REPORT - 238,000 JOBS ADDED

The labor market ended 2013 on a roll, with businesses continuing a several-month streak of solid payroll gains by adding 238,000 jobs in December, payroll processor ADP said Wednesday. Economists expected ADP to report 200,000 additional private-sector jobs…"Job gains are broad-based across industries, most notably in construction and manufacturing," said Mark Zandi, chief economist of Moody's Analytics, which helps ADP compile the report. "It appears that businesses are growing more confident and increasing their hiring." Full story at…

http://www.usatoday.com/story/money/business/2014/01/08/adp-employment-report-december/4363323/

10% CORRECTION COMING AND GOLD GOING DOWN (CNBC)

“Nuveen's Bob Doll sees a 10 percent stock correction amid a pretty good but volatile year for stocks, and he expects gold and other commodities to continue to fall. Doll, chief equity strategist at Nuveen Asset Management, also sees the economy growing at a 3 percent pace and the 10-year Treasury yield topping out at about 3.5 percent in 2014, while the Federal Reserve continues to hold short-term rates near zero. It should become clear by the end of the year that inflation has bottomed, but it will not be a factor to help gold out of its slump in 2014.” Full story and video at…

http://www.cnbc.com/id/101316307

FED TO CONTINUE CUTTING QE AT A STEADY PACE (Reuters)

“Two top Federal Reserve officials said on Tuesday they expected the U.S. central bank to reduce its stimulus at a steady pace, with the lone official to dissent against the Fed's decision to trim its bond buying saying he was comfortable with the approach…"I'm comfortable with the current approach that it looks like we're going to be following through on," he [Boston Fed President Eric Rosengren, who voted against the Fed's decision last month to reduce its monthly bond buying] said after giving a speech to an economic forum in Hartford. San Francisco Fed President John Williams, speaking in Phoenix, Ariz., said the central bank was likely to continue to cut its asset purchase program at a "steady, measured" pace in coming meetings.” Full story at…

http://www.reuters.com/article/2014/01/07/us-usa-fed-idUSBREA0618320140107

FED MINUTES CONFIRMED “MEASURED STEPS” BUT DEPENDS ON OUTLOOK (CNBC)

"The Open Markets Committee voted to cut the purchases from $85 billion to $75 billion a month, but gave no indication that a future course is preset. "Many members judged that the committee should proceed cautiously in taking its first action to reduce the pace of asset purchases and should indicate that further reductions would be undertaken in measured steps," the minutes said…”

“…Members also stressed the need to underscore that the pace of asset purchases was not on a preset course and would remain contingent on the committee's outlook for the labor market and inflation as well as its assessment of the efficacy and costs of purchases." Full story at…

http://www.cnbc.com/id/101320688

UNEMPLOYMENT INSURANCE

While politicians discuss extending long-term unemployment insurance, I thought it might be interesting to see how many job openings there are as of 10 December 2013. The answer is: A little less than 4-million job openings. That is about the same as January of 2005. The number employed was about the same too. There was no extended unemployment insurance in January of 2005; it was extended in 2008. So what’s the difference between now and January 2005? Other than politics, not much.

Source: Bureau of Labor Statistics, Current Employment Statistics and Job Openings and Labor Turnover Survey, December 10, 2013.

Note: Shaded area represents recession as determined by the National Bureau of Economic Research (NBER). Chart and additional data available at…

http://www.bls.gov/jlt/jlt_labstatgraphs_october2013.pdf

MARKET REPORT

Wednesday, the S&P 500 was down 1pt to 1837 (rounded).

VIX was down about 0.4% to 12.87.

The 10-year Treasury Note closed at 2.99% yield. As explained by Art Cashin, UBS Director of Floor Trading on the NYSE and CNBC commentator, rates at 3% or above are considered by some traders to be “trouble-for-stocks”.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing fell to 54% at the close Wednesday. (A number above 50% for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Wednesday, leaving the spread (new-hi minus new-low) at +142 (it was +125 Tuesday). The 10-day moving average of change in the spread fell to minus 17. In other words, over the last 10-days, on average, the spread has decreased by17 each day. Only Breadth remains positive; advancing volume and new-high/new-low data are negative. Overall, market internals remained neutral on the market, but are trending down.

Market Internals are a decent trend-following analysis of current market action, but in 2013, if I had been buying the positive ratings and selling negative ratings I would have under-performed a buy-and-hold strategy.

NTSM

The S&P 500 was 10.1% above the 200-dMA at the close Tuesday a week ago and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012).

Sentiment is screaming high at 81%-bulls (5-dMA of selected Rydex/Guggenheom funds); Price is positive since up days have been larger than down days over the past month; VIX and Volume are neutral. The most recent BUY signal for the NTSM system was 25 October. The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

MY INVESTED POSITION

I am about 30% invested in stocks as of 20 December (S&P 500-1540) because I upped my stock holdings by 10% on the 20^th of December. Unless I get a SELL signal in the NTSM system, I will continue to income-average (a little each month) into the stocks to get my %-invested up to around 50% (max for me now) unless there is a correction that would allow me to move in sooner and at a higher percentage. Since that is my expectation, I have not upped my invested percentage in one move as I normally would.

(A good rule of thumb for percent invested is to subtract your age from 100 and put that amount into the stock market. Generally a minimum of 50%-50% stocks and other investment is a reasonable value for the over 50-crowd; that’s my group. With bond yields rising keep to the short end of bonds, i.e., less than 10-year maturity or mutual funds that focus on the short end.)

Tuesday, January 7, 2014

2014 A Good Year?

2014 ECONOMIC FORECAST (New Deal Democrat)
“…unless we expect deflation (and right now I don't), there is every reason to view the long leading indicators, under either method, as being in agreement that the economic expansion will continue through the end of 2014.
On the other hand, the deceleration of most of the indicators, and also the deceleration of the WLI, cause me to believe that the second half will be considerably weaker than the first half. If the long leading indicators turn negative quickly enough and significantly enough, it is possible that we could enter into a recession in Q4. Before ruling that out, I want to see how 2013 Q4 corporate profits play out, as well as the next couple of months of housing and money supply data. But subject to that caveat – that there are mounting reasons to be concerned about 2015 – I look for continued positive readings in employment, wages, industrial production, and GDP through the year.” Lengthy analysis with numerous charts and thoughtful analysis at Advisor Perspectives (dShort.com) at…
http://advisorperspectives.com/dshort/guest/NDD-140106-2014-Forecast.php

MORE FROM JOHN HUSSMAN, PhD (Hussman Funds)

“We observe warnings from nearly every variant of overvalued, overbought, overbullish, rising-yield conditions that have accurately warned investors of oncoming market losses in a century of data, not to mention in real-time in 2000 and 2007…

…As one of many historically effective variants of this syndrome, define “overvalued” as a Shiller P/E anything higher than 18 (given an actual multiple of 25.7 here, any objections to the Shiller metric are quibbles); define “overbought” as the S&P 500 at least 8% over its 200-day average, and just to be extreme about it – within 2% of a 5-year high; define “overbullish” as a 2-week average of bulls greater than 54% with bears less than half that level – below 27%; define rising yields as a 10-year Treasury yield higher than it was 6 months earlier.”

“Prior to 2013, those conditions were observed only in June 2007 – about 2% from a bull market peak that would be followed by a 55% market loss; July 1999 – when optimistic investors could at least look for the S&P 500 to advance another 8% to the ultimate bull market peak in 2000, after which the market lost half its value – but not without a 12% correction between July and October 1999 first; the August 1987 pre-crash peak; the December 1972 peak, a few weeks before the New York Times quoted then-analyst Alan Greenspan saying “It’s very rare that you can be as unqualifiedly bullish as you can now” – immediately followed by a 50% market plunge; and (using imputed sentiment data) August 1929.” .” – John Hussman, PhD, Hussman Funds Weekly Market Commentary for 6 January 2014. Full commentary at…

http://www.hussmanfunds.com/

One wonders how much longer the FED can keep propping up the markets. The FED gets the credit for near record stock market returns in 2013. The FED has vowed to support the economy to the fullest and will even reverse tapering of QE if necessary. On the other hand, I doubt that even the FED could prop up the markets forever unless the economy begins to improve at a faster rate.

TREASURIES HIT 3% - THE END OF THE STOCK RALLY? (Michael Lombardi)

This was a quick but insightful read. Here’s the conclusion:

“Going into 2014…I am worried about key stock indices like the S&P 500. The easy money policies of the Federal Reserve have been largely responsible for 2013's rally in the key stock indices. But inadvertently, the Fed has created a new stock market bubble with its ridiculous, long-running money printing programs. Dear reader, the higher key stock indices go, the bigger the fall is going to be and the bigger the damage will be to consumer confidence and spending.” – Michael Lombardi. Full commentary and analysis posted at Advisor Perspectives, dShort.com at…

http://advisorperspectives.com/dshort/guest/Michael-Lombardi-1410106-Treasuries-at-3-to-end-Rally.php

NTSM PERFORMANCE UPDATE

I’ve updated the performance page on the right of the NTSM Blog under Pages, titled “Performance of the Navigate the Stock Market System” thru 2013.

MARKET REPORT

Tuesday, the S&P 500 was up 0.6% to 1838 (rounded).

VIX was down about 5% to 12.92.

The 10-year Treasury Note closed at 2.94% yield. As explained by Art Cashin, UBS Director of Floor Trading on the NYSE and CNBC commentator, rates at 3% or above are considered by some traders to be “trouble-for-stocks”.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing was 57% at the close Tuesday. (A number above 50% for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Tuesday, leaving the spread (new-hi minus new-low) at +125 (it was +105 Monday). The 10-day moving average of change in the spread fell to minus 12. In other words, over the last 10-days, on average, the spread has decreased by12 each day. Market internals remained NEUTRAL on the market.

NTSM

The S&P 500 was 10.1% above the 200-dMA at the close Tuesday a week ago and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012). That stat was 9.1% above the 200-dMA Tuesday (today). The Index is 2.4% above the 50-dMA.

I expect the markets to pullback in the first quarter of 2014, but it remains to be seen whether it will be another small buy-the-dip event or something more.

My New Year’s resolution was to stop trying to predict short term moves in the markets…That lasted one-day!

The most recent BUY signal for the NTSM system was 25 October. The “5-10-20 Timer” switched to BUY from HOLD on 18 December.
THE NTSM ANALYSIS IS HOLD.

MY INVESTED POSITION

Monday, January 6, 2014

John Hussman: MORE Pessimistic…Zimmerman Predicts 75% crash - starting soon!...January Effect

I am not a screaming bear; let’s just say that I am cautious. My current plan is to increase my stock holding of 30% to a more fully invested position of 50% (about the max for my age given the current market) AND assuming the NTSM system doesn’t flash sell during my buying process; but here are two guys who think the stock-market sky is about to fall.

BULLS RUNNING OUT OF TIME

PEAK IS COMING (Hussman Funds)
“It’s almost mind-boggling that investors actually expect the present speculative run to end well. As I wrote about the oil market in July 2008 as prices raced toward $150 a barrel…“Geek's Rule o' Thumb: When you have to fit a sixth-order polynomial to capture price history because exponential growth is too conservative, you're probably close to a peak.” Oil prices actually collapsed to about $35 a barrel shortly thereafter. The preceding advance to the speculative peak was very well-described by a “log periodic bubble” of the sort that characterizes the S&P 500 at present…

…Based on the fidelity of the recent advance to this price structure, we estimate the “finite-time singularity” of the present log-periodic bubble to occur (or to have occurred) somewhere between December 31, 2013 and January 13, 2014. That does not mean that prices must immediately crash – only that the dynamics will then lend themselves to a great deal of potential instability, if prior log-periodic bubbles in equity and commodity markets across history are any indication. It bears repeating that our own defensiveness is driven by a broad ensemble of evidence, not simply price dynamics, not simply valuations, not simply sentiment, but the “full catastrophe” – which includes the fact that strong economic, speculative and monetary enthusiasm has historically been quite a contrary indicator for stocks….

…we now estimate negative prospective total returns for the S&P 500 on every horizon of less than 7 years.” – John Hussman, PhD, Hussman Funds Weekly Market Commentary for 6 January 2014. Full commentary at…
http://www.hussmanfunds.com/

John Hussman is fitting a plot of a mathematical equation (sixth order polynomial) to the S&P 500 because, as he says, the exponential curve is not steep enough to fit the current S&P trajectory. His guess of a downturn starting before 13 January (or at least noting the conditions are ripe for downturn) is based on the curve relative to prior bubbles and additional negative syndromes that have led to downturns in the past. See the plot and analysis at…

http://www.hussmanfunds.com/wmc/wmc140106.htm

CRASH IS NEAR - WORSE THAN 2008 (WSJ)

“…2014 will be the year of “major reversals,” with the Dow Jones Industrial Average expected to start a two-year decline that could eventually take it down more than 70% to below 5000. United-ICAP chief market technician Walter Zimmerman said the Dow Industrials could still rally another 4% or so first, to a high around 17150, before the great reversal begins. And for those who thought 2008 was the worst bear market they will ever see, just wait...’Based on our longer-term time cycles the present stock market rally must be considered the bubble to end all bubbles,’ Mr. Zimmerman wrote in a note to clients….He sees the S&P 500 eventually bottoming as low as 450…75%...below current levels.”
Full story at…
http://blogs.wsj.com/moneybeat/2014/01/03/the-bearish-call-to-end-all-bearish-calls/?mod=WSJ_hpp_MIDDLENexttoWhatsNewsFifth

Here is a link for the full analysis and discussion by Walter Zimmerman at United – ICAP:

http://www.united-icap.com/LinkClick.aspx?fileticket=Tz4OdBkIa44%3d&tabid=145&mid=632

OTHER VIEWS OF THE ZIMMERMAN CRASH CALL – FOR BALANCE

Just to provide some balance, here are a couple of comments from a trader board:
(1) “As with most of these charlatans, they have no explanation as to why the markets will collapse other than looking at a chart of past history. What calamity must befall the global market (not just the US) that would cause a 70% drop? Nuclear war? California earthquake dropping 1/3 of it into the Pacific Ocean? The Yellowstone Caldera exploding?”

…or another comment:

(2) “…those of us who have been believing that this fraudulent economy means a collapsing stock market have left hundreds of thousands of dollars - maybe millions on the table in our own accounts. At some point, it probably does implode, but the can kicking has worked far longer than many of us thought and will probably continue to work longer than we thought imaginable. That said, if we are near retirement, we can't be "all in" on an economic fraud. It's important to listen to guys like this, but we must use a filter when doing so.”

Actually past history predicts exactly this sort of crash in the context of a secular bear market and I have mentioned many times that this sort of reversion is expected (although I'd expect a bottom no worse than 700-1000). The catch is: saying it is going to start NOW seems implausible. I think there has to be a catalyst. In 2000 it was Fed tightening with the express purpose of slowing an overheated economy. In 2007 it was a housing crisis and the fear of 10-dollar gasoline along with the Bear Sterns failure at or near the prior market highs. This time? Perhaps it will be falling corporate profits (given the large % of warnings during last quarter's earning season - we’ll see. Hussman and Zimmerman will be right…but when? I thought Hussman was right in 2013 and that opinion didn’t fare too well.

JANUARY EFFECT (Seeking Alpha)

Forget the first-day rule (as the first day of January goes, so goes the year) and the 5-day rule (similar to the first day rule, but for 5-days). The only January rule that works is:
“…an entire month's performance does hold predictive abilities. Particularly when that month in question is January. Again, I'll turn to number-cruncher extraordinaire, Silverblatt, for the irrefutable proof. He calculated that the market adage, "as January goes, so goes the year," has been right in 62 out of the last 85 years. That works out to 72.9% of the time. While it's not a sure thing, the odds of January's performance predicting the year's overall outcome is much better than flipping a coin.” Story at…
http://seekingalpha.com/article/1930301-The-Shakespeare-Omen-Haunts-This-Years-Market?source=yahoo

MARKET REPORT

Monday, the S&P 500 was down 0.3% to 1827 (rounded). The index is down 1% in the last 3-days; no big deal (so far) and those fear mongering about 3-down days in a row are wasting my time.

VIX was down about 2% to 13.55.

The 10-year Treasury Note closed at 2.96% yield. As explained by Art Cashin, UBS Director of Floor Trading on the NYSE and CNBC commentator, rates at 3% or above are considered by some traders to be “trouble-for-stocks”.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing was up slightly to 58% at the close Monday. (A number above 50% for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Monday, leaving the spread (new-hi minus new-low) at +105 (it was +73 Friday). The 10-day moving average of change in the spread was +4. In other words, over the last 10-days, on average, the spread has increased by 4 each day. Market internals remained neutral on the market. The 10-dMA of up-volume has been trending down; otherwise breadth and new-high/new-low data look good.

NTSM

The S&P 500 was 10.1% above the 200-dMA at the close last Tuesday and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012). That stat was 8.5% above the 200-dMA Monday. The Index is 1.8% above the 50-dMA. It will be interesting to see if the computers get worried if the 50-dMA is broken.

I expect the markets to pullback in the first quarter of 2014, but it remains to be seen whether it will be another small buy-the-dip event or something more.

My New Year’s resolution was to stop trying to predict short term moves in the markets…That lasted one-day!

The most recent BUY signal for the NTSM system was 25 October. The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

MY INVESTED POSITION

Friday, January 3, 2014

IMF – Defaults of Nations Likely

1930’s-STYLE DEFAULTS LIKELY – IMF RESEARCH (CNBC)
“Many advanced economies are likely to require financial repression, outright debt restructuring, higher inflation and a variety of capital controls, a new research paper commissioned by the International Monetary Fund (IMF) has warned. The magnitude of today's debt in Western economies will mean fiscal austerity will not be sufficient, Harvard economists Carmen Reinhart and Kenneth Rogoff said in the report, as policymakers continue to underestimate the depth and duration of the downturn. "It is clear that governments should be careful in their assumption that growth alone will be able to end the crisis. Instead, today's advanced country governments may have to look increasingly to the approaches that have long been associated with emerging markets, and that advanced countries themselves once practiced not so long ago," they said. Delving into the realms of history, they detail the widespread default by both advanced and emerging European nations on World War I debts to the United States during the 1930s. The research suggests that "collective amnesia" of this history has led to current policies that in some cases risk exacerbating the final costs of deleveraging…
…Central government gross debt-to-GDP (gross domestic product) ratios this year are expected to be 95.3 percent for the euro area and 109.2 percent for the U.S., according to the IMF's projections last April.” Full story at…
http://www.cnbc.com/id/101307602

This sort of report may get the gold bugs going. Gold has lost about 25% of its value during 2013 and qualifies as a legitimate bear market. Gold made new lows recently, versus the prior low 6-months ago, on lower volume. That’s a reasonable technical bottom call, but many are calling for gold to go lower in 2014. Gold was around 40 in 2005; now it’s close to 120. GLD (gold ETF) was up 1% today.

PROFIT MARGINS

Corporate earnings improved by 5.4% in 2013 while revenues increased only 1.4%. As Art Cashin, UBS and CNBC contributor, reminded us today, “Margins revert to the mean” and margins are high. Corporate earnings can only improve if revenues improve. Revenues will have to improve in 2014 or expect trouble.

MARKET REPORT

Friday, the S&P 500 was unchanged at 1831 (rounded).
VIX declined about 3% to 13.76.

The 10-year Treasury Note closed at 3% yield. Rates at 3% or above are considered by some traders to be “trouble-for-stocks”.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing was 57% at the close Friday. (A number above 50% for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Friday, leaving the spread (new-hi minus new-low) at +73 (it was +53 Thursday). The 10-day moving average of change in the spread was minus 3. In other words, over the last 10-days, on average, the spread has decreased by 3 each day. Market internals remained neutral on the market. The up-volume has been trending down and today the new-high, new-low drifted negative.

NTSM

The S&P 500 was 10.1% above the 200-dMA at the close Tuesday and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012). That stat was 8.9% above the 200-dMA Friday. I said yesterday that the S&P 500 is only 2% above the 50-dMA so it looks like any pullback would be small. Actually the opposite outcome is more likely. If the markets pullback, they will be quick to break the 50-dMA and that may cause a little more worry among traders.

I expect the markets to pullback in the first quarter of 2014, but it remains to be seen whether it will be another small buy-the-dip event or something more.

My New Year’s resolution was to stop trying to predict short term moves in the markets…Gone already!

The most recent BUY signal for the NTSM system was 25 October. The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

MY INVESTED POSITION

Thursday, January 2, 2014

ISM Non-Manufacturing Down…ISM Manufacturing Up…Unemployment Claims Up…

ISM NON MANUFACTURNG DOWN SOME (Briefing.com)
"The ISM Non-manufacturing Index fell to 53.9 in November from 55.4 in October. The Briefing.com consensus expected the ISM Non-manufacturing Index to drop to 55.4…The market generally doesn't pay much attention to the services index because the services sector is less cyclical than the manufacturing sector. To that end, October marked the 46th consecutive month in which economic activity in the non-manufacturing sector has expanded.” Story and charts at Briefing.com at
http://www.briefing.com/Investor/Calendars/Economic/Releases/napmserv.htm

ISM MANUFACTURING UP (Bloomberg)

“Manufacturing grew in December at the second-fastest pace in more than two years, fueled by a gain in orders that will help propel the U.S. expansion. The Institute for Supply Management’s factory index eased to 57 from the prior month’s 57.3, which was the highest since April 2011…” Story at…
http://www.bloomberg.com/news/2014-01-02/u-s-ism-manufacturing-index-fell-to-57-in-december-from-57-3.html

UNEMPLOYMENT CLAIMS UP AND TRENDING IN THE WRONG DIRECTION (dShort.com)

“The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 339,000 new claims number was a 2,000 decline from the previous week’s 341,000, an upward revision from 338,000.” Charts and analysis at…
http://advisorperspectives.com/dshort/updates/Weekly-Unemployment-Claims.php

SENTIMENT INDICATOR AT RECORD (ZeroHedge)

“With over 60% of those surveyed by Investors Intelligence now bullish, positive sentiment (or crowding, depending on your perspective) has risen once again and now to levels that are practically the highest ever. Perhaps even more crucial is the absolute dearth of bears leaving the Bull-Bear ratio at a record-busting level over 4x. The simple question, as we asked before, is - what happens when there's no one left to buy from?” Additional chart at…
http://www.zerohedge.com/news/2014-01-02/bulls-got-moar-bullish-er
At 83%-bulls as of Tuesday, my sentiment value is slightly more than 5 to 1 bulls, the highest I have seen since data was available going back to 2003 for the Rydex/Guggenheim funds I use as a sentiment indicator.

Here’s another discussion on the question: “Are we now in a new secular Bull-Market? Quick answer – No.

SECULAR BULL AND BEAR MARKETS (dShort.com)

Doug Short presents an interesting and thoughtful analysis of inflation adjusted data. In the analysis he concluded: “Given the unprecedented demographic headwinds for today's investors, I'm unable to share…confidence that the US is now in a new secular bull market.” For the full analysis see Advisor Perspectives at…
http://advisorperspectives.com/dshort/updates/Secular-Bull-and-Bear-Markets.php
The following chart is from Doug short’s analysis noted above. On a strictly “regression-to-the-mean” analysis, the S&P Composite is very high now.

Chart and discussion in the same article I linked above, but I’ll link it here again at…

http://advisorperspectives.com/dshort/updates/Secular-Bull-and-Bear-Markets.php

MARKET REPORT

Thursday, the S&P 500 was down 0.9% to 1832 (rounded).
VIX was up about 4% to 14.23.

-The 10-year Treasury Note fell most of the day and closed at 2.99% yield, below the 3% “trouble-for-stocks” level. (Doug Short has detailed Treasury Yield history at…

http://advisorperspectives.com/dshort/updates/Treasury-Yield-Snapshot.php)
-NYSE Volume was above normal so the Holiday is over.
-Final numbers showed that today was NOT a statistically significant day in price/ volume.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing 59% at the close Thursday. (A number above 50% for the 10-day average is generally good news for the market.) New-highs outpaced new-lows Thursday, leaving the spread (new-hi minus new-low) at +53 (it was +229 Tuesday). The 10-day moving average of change in the spread was +6. In other words, over the last 10-days, on average, the spread has increased by 6 each day.

Market internals remained neutral on the market. The up-volume has been trending down and that prevents the internals from a positive reading.

NTSM

The S&P 500 was 10.1% above the 200-dMA at the close Tuesday and a value of 10% has led to small pullbacks in 2013 (and corrections in 2011 and 2012). That stat fell to 9% above the 200-dMA Thursday. The S&P 500 is only 2% above the 50-dMA so it looks like any pullback would be small.

Sentiment is extreme bullish and that is a negative for the market. Other indicators are all neutral of positive. It won’t take much to start a short-term pullback, because investors are nervously sitting on big gains from last year. Perhaps a correction started today – time will tell. My New Year’s resolution is to stop trying to predict short term moves in the markets…I’ll give that up tomorrow I’m sure!

The most recent BUY signal for the NTSM system was 25 October. The “5-10-20 Timer” switched to BUY from HOLD on 18 December.

MY INVESTED POSITION

I am about 30% invested in stocks as of 20 December (S&P 500-1540) because I upped my stock holdings by 10% on the 20^th of December. Unless I get a SELL signal in the NTSM system, I will continue to income-average (a little each month) into the stocks to get my %-invested up to around 50% (max for me now) unless there is a correction that would allow me to move in sooner and at a higher percentage. I expect the markets to pullback in the first quarter of 2014, but it remains to be seen whether it will be another small buy-the-dip event or something more.