Dividend
Yield: 3.86%
This
is an historically neutral yield. It is in the yield area
indicating a fair valued market. The yield should go to 4.5% to 6.0%
before a solid market bottom occurs. We suspect any bottom is likely to
be closer to 6.0% than 4.5%. The 4.5% area could have a nice rally.
50 and 200
week moving average (MA) comments:
The
current price is above the 50 day MA(7550) but below the 200 day
MA. The current price and 50 week MA are below the 200 week
MA. This doesn’t happen often and could be considered a good time
to accumulate increasing dividend paying stocks.
Transportations:
The current price is above the day 50 but below the 200 day MA.
Utilities:
The current price is remains below its 50 and 200 day MA.
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The Momentum Indicator:
(for both
the NYSE and NASDAQ)
The charts are in a buying zone around 75 and a selling zone around 120. 100 is the neutral zone. When the chart is around 75, it is time to look to buy. When it is above 120, is time to think about selling. The NYSE went to 160 in early January. It was the highest in over 3 years. The NASDAQ and NYSE are now above 100. This is a healthy sign for an uptrend.
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Weekly 52 week highs and lows: This remains negative as it has most of the year. The lows are getting fewer. The path of least resistance is neutral.
Intermediate-term C indicator:
This had turned positive last week. This is a sign of a rising bias for the market for a while.
The
Workshop total:
The number is rising the last 4 weeks. This is a healthy sign for an up market.
Conclusion:
The indicators are building for a rising market for awhile. March’s low may hold until at least fall.
Investment
Notes
The
current market seems to be reacting to the economic stimulus. Hope is
over riding the reality of government intervention into the economy and
unintended consequences for now. The market remains more emotional than
rational. It has had the fastest 20%+ rally since 1938. It rallied so
fast, that it now needs a breather for a week of two. This was the
rally that set up in February and early March. If there is to be a
rally this year, this is the time for it. The next few weeks into June
are likely to have an upward bias. The stocks above their 200 day
moving average went from 2% in March to 13% last week. This remains in
the value range.
It is possible for this rally to rise
another 1000 points or so but it is still a major rally in a long term
down trend rather than the beginning of a new major uptrend. The next
few weeks could be used for trading, to raise cash as an allocation, to
get rid of some of the losers and take some profits in your equity
portfolio. It may also be time to consider some bonds or bond funds in
both TIPS and investment grade bonds. We are likely to be in a
multi– year trading range where capital gains are likely to be fewer
and smaller.
Watch Congress and how much they give in to
unions and protectionism and other spending and economic
intervention programs. Things like that will give an idea of how much
longer and how deeper this correction could go. (4-8-09)
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