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The US Market Remains In A Bull Market

  • Written by Syndicated Publisher No Comments Comments
    March 8, 2014

    The market clearly remains in its bull market. We don’t need our new long-term indicator to verify that, but it does.

    It’s a proprietary weighted composite of major U.S. stock market indexes, with a long-term moving average providing trend direction, and support and resistance levels.

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    The m.a. is also the trigger line for potential major trend reversals.

    Over the last 20 years, there have been five major trend reversals, into three bull markets and two bear markets. There were also seven reversals that resulted in only corrections of 10% to 19% for the S&P 500 or Dow, and then re-entries. Those provided no gains or losses before re-entries, but were properly positioned for the fear at the time that a bear market had potentially begun. 

    The strategy incorporates a five-day delay before acting on a signal, which is designed to eliminate those times when a break above or below the trigger line is a false signal that lasts only a few days before the major trend is re-confirmed. Those instances are circled in blue. 

    This carefully researched and developed new indicator will provide considerable impact on our outlook in the future, in providing more confidence in our intermediate-term buy and sell signals, and both long-side and downside positions in our portfolios, therefore less holding of cash due to risk concerns.

    It may also result in its own portfolio for buy and hold investors interested only in exiting for bear markets.

    But will the bull market last into the market’s unfavorable season again this year?

    Will it even last until the end of the favorable season in April or May?

    U.S. economic reports this week were mixed and showed some glimmers of hope for a change.

    Monday’s reports were that Consumer Spending was up 0.4% in January, double the consensus forecast of 0.2%. Consumer Income was up 0.3%, also better than the consensus forecast for 0.2%. Construction Spending was up 0.1% in January. The consensus forecast was for a decline of 0.4%. The ISM Mfg Index recovered partway from its scary plunge to 51.3 in January, improving to 53.2 in February The consensus forecast was for a smaller bounce-back to 52.5.

    But then yesterday the ADP Employment Report for February showed only 139,000 jobs were created in the private sector in February, considerably worse than the consensus forecast of 160,000. And the previous report of 175,000 jobs in January was revised down significantly to only 127,000. And the ISM non-mfg Index, which covers the services sector, unexpectedly declined from 54.0 in January to 51.6 in February. The consensus forecast was for a smaller decline to 53.0.

    This morning it was that U.S. productivity in the 4th quarter was revised down sharply, from the previously reported 3.2% to 1.8%. Is that an indication that the next revision of 4th quarter GDP growth will be further to the downside. The revision last week was from the original 3.2% to 2.4%, which has forecasts for this quarter already revised down to under 2%.

    Let’s hope it is indeed all weather related.

    But, investor sentiment isn’t encouraging.

    Ned Davis Research reports its Crowd Sentiment Poll is showing extreme optimism, at a level it considers bearish for the market.

    Investors Intelligence reports its sentiment index is at 53.5% bulls, 17.2% bears. 55% bulls, or less than 18%bears, is considered bearish for the market.

    The National Assoc. of Active Investment Managers (NAAIM) poll has jumped from 76% bullish to 92%. Below 30% is considered bullish for the market, above 70% is considered bearish for the market.

    Meanwhile, the Vickers Weekly Insider Report from Argus Research, reports corporate insiders are as bearish, based on the ratio of their buying and selling, as they were in 2007 just before the 2007-2009 market collapse.

    We’ll just trust our technical indicators, intermediate-term, and now long-term.

    The short-term indicators, which have been correct with the market’s short-term gyrations have turned mixed.

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    To read my weekend newspaper column click here:  Do Economic Reports Mean Anything This Time-

    Subscribers to Street Smart Report:

    In addition to the charts and signals in the ‘premium content’ area of this blog, the mid-week Markets Report (stocks, gold, & bonds) is in your secure area of the Street Smart Report website from last evening.

    Non-Subscribers:

    Don’t be too late with a New Year’s resolution to make more profits this year, and just as importantly avoid losses, and at very reasonable cost! Subscribe now!

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

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