U.S. Stock Market – Quiet Day

While most major U.S. stock market averages ended today without much change from yesterday, there was some intra-day volatility and there were a few noteworthy trades.

Pre-NY opening, Japan’s Nikkei-225 Average soared 3.77% overnight. Talk about positive central bank action! Easier monetary policies from the Bank of Japan have boosted the Nikkei Average 32% over the last three months. The S&P 500 Index is up about 11% over the same period.

T-bond prices, which are supposed to be in a death spiral according to famed trader George Soros, rebounded nicely today after getting hit pretty hard on Tuesday. The T-bond ETF (symbol TLT) rose 0.82% today as the benchmark 30-year T-bond rate fell 2.7 basis points to 3.181%. The 30-year T-bond bottomed out last July around 2.452%.

So what do Japan’s Nikkei Index and today’s rebound in U.S. Treasury prices have to do with the U.S. stock market? Maybe not much, but given these gains I think major U.S. stock market averages should have done better today, and bulls look tired.

Here are today’s closing marks for four major indices, with changes from Tuesday’s close:

Dow Jones Industrial Average              13,986.52        + 7.22              +0.05%

S&P 500 Index                                      1,512.12        + 0.83              +0.05%

NASDAQ Composite Index                   3,168.48        -  3.10              - 0.10%

Russell 2000 Index                                    911.29        + 3.07              +0.34%

According to the latest Vickers Weekly Insider Report, Insider Sales were 9.20 to 1 in January. This is considered a relatively high number. Quite frankly, while insider trading activity is generally on the right side of the market, I have found that this well informed group tends to be “early” when it comes to major trend changes. For perspective, insider sales ratios below 2 to 1 are considered bullish and insider sales ratios above 5 to 1 are considered bearish. January’s 9.20 to 1 ratio is therefore considered very bearish.

Bottom Line: I would like to see strength in most major U.S. stock market gauges early tomorrow and then a sharp intra-day reversal to the downside which would trigger official sell signals within my computer-based trading system. While no one rings a bell when a major stock market top has formed, a sell signal within my computer system would be the next best thing. However, even if an official sell signal is not triggered, I think the market will be heading lower into the weekend and then down sharply next week. 

S&P 500 Weekly Bar Chart (SPY) with Computer-based Buy & Sell Signals