Friday, August 26, 2016

GDP … Michigan Sentiment … Yellen Jackson Hole Speech … VIX Update …Stock Market Analysis

GDP (US News)
“America's economic growth was even weaker than previously believed in the second quarter of the year, as the country's gross domestic product ticked up an underwhelming 1.1 percent in April, May and June. U.S. GDP was revised down slightly from a previously reported 1.2 percent annualized rate…”
http://www.usnews.com/news/articles/2016-08-26/gdp-sinks-lower-despite-spending-uptick
 
MICHIGAN SENTIMENT
“The final results of the University of Michigan Consumer Sentiment Index for August was 89.8, below the 90.4 preliminary estimate and 90.6 average analyst estimate, according to a Thomson Reuters survey. The current conditions portion of the survey fell to 107 from 109 in July.” Story at… 
http://www.economiccalendar.com/2016/08/26/final-reutersmichigan-consumer-sentiment-index-for-august-edges-lower-to-89-8/
My cmt: Not much change here.
 
YELLEN SPEECH (Business Insider)
“The case for another interest-rate hike has strengthened in recent months, according to Federal Reserve Chair Janet Yellen….” Story at…
http://www.businessinsider.com/janet-yellens-speech-at-jackson-hole-august-26-2016-8
Here’s the exact quote: “Blah Blah Blah Blah Blah Blah…data dependent…Blah Blah Blah Blah Blah…” – Janet Yellen. This confirms with certainty that the Federal Reserve might someday raise rates.
 
VIX UPDATE – 3 THINGS (Real Investment Advice)
“The complacency in the equity markets, as measured by implied volatility (VIX), is at levels rarely seen…net speculative positions in the VIX futures contracts are at record levels of short exposure. In other words, speculators betting on a VIX decline outnumber those betting on an increase in volatility by the largest margin in at least twelve years. A normalization of this positioning could quickly occur and in a disorderly fashion due to the extreme positioning of speculative traders. If this were to occur it would likely add to downside pressure on equity prices.” Commentary at… 
https://realinvestmentadvice.com/3-things-4-trillion-qe-vix-update-wage-warning/
My cmt: Got that. My VXX trade is a contrarian play betting against the majority who are betting on a VIX decline.
 
MARKET REPORT / ANALYSIS        
-Friday the S&P 500 was down about 0.2% to 2169.
-VIX rose about 0.2% to 13.65.
-The yield on the 10-year Treasury rose to 1.64%.
 
Short-term indicators are still pointing down. My bearish short-term stance remains and I suspect next week will be down again.  So far I am 2 for 3 on my weekly guesses.
 
VXX TRADE:
Friday, the calm-before-the-storm indicator (low standard of deviation in recent market moves) still remains down and that suggests that VXX remained a buy as of Friday’s close.
 
SHORT TRADE
I am still holding short positions, but I did exit some of the short positions and transitioned into VXX. (This books a loss for the trade for tax purposes and maintains a bearish stance.) I caution again to take it easy on this high risk stuff.
 
MONEY TREND INDICATOR
My short-term Money Trend indicator can be volatile; Friday it is trending down, a bearish indication. 
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 50.3% Friday. It was 51.1% Thursday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks rose to 55.1%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator declined from -24 to -35.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) improved  to +185 Friday. (It was +106 Thursday.) The 10-day moving average of the change in spread was +3. In other words, over the last 10-days, on average, the spread has increased by 3 each day. Market Internals improved to neutral on the market.


Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are usually right, but they are often late.  They are most useful when they diverge from the Index.  In 2014, using these internals alone would have made a 9% return vs. 13% for the S&P 500 (in on Positive, out on Negative – no shorting). 
 
LONG TERM INDICATOR
Friday the Price indicator was positive; Sentiment, VIX and & Volume indicators were neutral. The long-term indicator is HOLD. The important Buy-signal was in June and before that at the bottom in February (Too bad I was too stupid to follow my own system!). Now a BUY-signal just shows that the markets have been pretty good recently.  I think we are near a short-term Top so this is not a great time to buy.


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 12 July I increased my invested position in my retirement account to 25% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP). I added to that position Thursday 21 July bringing my invested total up to 40% in stocks.  I expect to add more stocks should we get the anticipated pullback.
 
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions.  I’m following my system now, especially since the Index has climbed above my initial sell-point of 2100 on the S&P 500 back in November 2015.

Thursday, August 25, 2016

Jobless Claims … Durable Goods Orders … Kansas City FED Manufacturing … Stock Market Analysis

JOBLESS CLAIMS (Bloomberg)
“The number of Americans filing applications for unemployment benefits fell to the lowest level in five weeks, another sign of endurance in the labor market. Jobless claims dropped by 1,000 to 261,000 in the week ended Aug. 20…” Story at…
http://www.bloomberg.com/news/articles/2016-08-25/jobless-claims-in-u-s-decline-to-lowest-level-in-five-weeks
 
DURABLE GOODS ORDERS (Business Insider)
Durable goods orders rose 4.4% in July, according to an advance report from the Department of Commerce… A downward revised print for June showed that orders fell 4.2%...” Story at…
http://www.businessinsider.com/durable-goods-orders-advance-report-for-july-2016-2016-8
Much of the prior decline in orders may have been due to oil services.  Since oil production is beginning to pick up (surprisingly) the article suggests the bottom is in for orders. Durable goods orders are still down 3.3% compared to last year.
 
KANSAS CITY FED MANFACTURING (Wichita Eagle)
“Manufacturing levels in the Kansas City Federal Reserve Bank district declined in June, after last month’s brief rebound, resuming a more than year-long down trend, according to the bank’s monthly survey. The downturn in the energy and agriculture sectors which has hurt the region for more than [a] year may be spreading to other sectors…” Story at….
http://www.kansas.com/news/business/agriculture/article92341797.html
My cmt: The article went on to note that expectations for future activity was high.

MARKET REPORT / ANALYSIS        
-Thursday the S&P 500 was down about 0.1% to 2172.
-VIX rose about 1% to 13.63.
-The yield on the 10-year Treasury rose to 1.58%.
 
Broken Record Report: The 10-dMA of Tick (sum of closing up minus down trades) was again over 300 for the sixth day in a row and that is a bearish sign according to Tom McClellan. Short-term indicators are pointing down. My bearish short-term stance remains and I suspect this week will be down.
 
VXX TRADE:
Today, the calm-before-the-storm indicator (low standard of deviation in recent market moves) still remains down and that suggests that VXX remained a buy as of Thursday’s close. It’s a better buy today than when I first bought it about 3-weeks ago and VIX is nearly the same value as it was then.  Unfortunately, VXX is down about 3%, because it doesn’t always closely track VIX.  In addition VXX will only move about half of VIX.
 
I plan to exit this trade when I have a statistical “BUY” indication in price-volume. Currently, it would take about a one-day 1.5% drop in the S&P 500 to generate a Buy signal.  If it happens, I would expect to generate a decent profit on the VXX  trade. Whether that would also be a good point to exit short positions remains to be seen.
 
SHORT TRADE
I am still holding short positions, but I did exit some of the short positions and transitioned into VXX. (This books a loss for the trade for tax purposes and maintains a bearish stance.) I caution again to take it easy on this high risk stuff.
 
MONEY TREND INDICATOR
My short-term Money Trend indicator can be volatile; Thursday it is trending down more steeply; a bearish indication. 
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dipped to 51.1% Thursday. It was 51.8% Wednesday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks dipped to 54.9%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator improved slightly from -29 to -24.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) improved slightly to +106 Thursday. (It was +102 Wednesday.) The 10-day moving average of the change in spread was minus-10. In other words, over the last 10-days, on average, the spread has decreased by 10 each day. Market Internals remained negative on the market.


Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are usually right, but they are often late.  They are most useful when they diverge from the Index.  In 2014, using these internals alone would have made a 9% return vs. 13% for the S&P 500 (in on Positive, out on Negative – no shorting). 
 
LONG TERM INDICATOR
Thursday the Price indicators was positive; Sentiment, VIX and & Volume indicators were neutral. The long-term indicator is HOLD. The important Buy-signal was in June and before that at the bottom in February (Too bad I was too stupid to follow my own system!).


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 12 July I increased my invested position in my retirement account to 25% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP). I added to that position Thursday 21 July bringing my invested total up to 40% in stocks.  I expect to add more stocks should we get the anticipated pullback.
 
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions.  I’m following my system now, especially since the Index has climbed above my initial sell-point of 2100 on the S&P 500 back in November 2015.

Wednesday, August 24, 2016

Home Sales … Crude Inventories … Trucking Down Slightly this Month … Yellen Speech on Friday … Stock Market Analysis

Politics - That field of knowledge which allows the haves to manipulate and embezzle the have nots. From the Greek poly meaning many and ticks meaning small blood sucking insects. (In this case, I think the “haves” are the politicians.)
 
EXISTING HOME SALES DECLINE (Reuters)
"U.S. home resales fell more than expected in July after four straight months of strong gains as a lack of inventory limited choice for buyers, but further gains in prices suggested the housing market remained on solid ground. The National Association of Realtors said on Wednesday existing home sales declined 3.2 percent…” Story at…
http://www.reuters.com/article/us-usa-economy-housing-idUSKCN10Z1QA
My cmt: New Home sales are probably more important to the economy than existing sales, because of construction employment.  Mike Shedlock pointed out that the news yesterday (“New-home sales surged in July to the highest level in almost nine years…”) was misleading. When one looks at the overall record, new home sales are improving, but could be a lot better.

Chart from…
https://mishgea.files.wordpress.com/2016/08/new-home-sales-2016-08a.png
 
CRUDE INVENTORIES (24/7 Wall St.)
“U.S. commercial crude inventories increased by 2.5 million barrels last week, maintaining a total U.S. commercial crude inventory of 523.6 million barrels. The commercial crude inventory remains at historically high levels for this time of year…”
http://247wallst.com/energy-economy/2016/08/24/rising-crude-oil-inventory-stifles-prices-after-volatile-week/
My cmt: Crude oil was falling today due to the inventory build.
 
KEEP ON TRUCKIN’ (ATA)
“American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 2.1% in July, following a revised 1.6% decline during June….Compared with July 2015, the SA index rose just 0.3%, the smallest year-over-year gain in 2016…Year-to-date, compared with the same period in 2015, tonnage was up 3.2%.” Press release from ATA at…
http://www.trucking.org/article/ATA-Truck-Tonnage-Index-Fell-2.1%25-in-July
 
YELLEN SPEECH ON FRIDAY
I predict Yellen will say this at Jackson Hole: “Blah Blah Blah Blah Blah Blah…data dependent…Blah Blah Blah Blah Blah…” Please! I have had enough.
 
MARKET REPORT / ANALYSIS        
- Wednesday the S&P 500 was down about 0.5% to 2175.
-VIX rose about 9% to 13.45.
-The yield on the 10-year Treasury rose slightly to 1.56%.
 
Broken Record Report: The 10-dMA of Tick (sum of closing up minus down trades) was again over 300 for the fifth day in a row and that is a bearish sign according to Tom McClellan. Short-term indicators are pointing down, but not drastically so. My bearish short-term stance remains and I suspect this week will be down.
 
On a bullish side (maybe?), Wednesday, the size of the down-move was statistically significant and that means that the price-volume move exceeded my statistical parameters and, in about 60% of the time, that leads to an up-day the next day (Thursday). I have no idea whether this is still a valid analysis since the market has been so calm that it now takes a move about half as big to create a statistically significant day.
 
VXX TRADE:
Today, the calm-before-the-storm indicator (low standard of deviation in recent market moves) still remains down and that suggests that VXX remained a buy as of Wednesday’s close. It’s a better buy today than when I first bought it about 2-weeks ago and VIX is nearly the same value as it was then.  Unfortunately, VXX is down about 3%, because it doesn’t always closely track VIX.  In addition VXX will only move about half of VIX.
 
I plan to exit this trade when I have a statistical “BUY” indication in price-volume. Currently, it would take about a one-day 1.5% drop in the S&P 500 to generate a Buy signal.  If it happens, I would expect to generate a decent profit on the VXX  trade. Whether that would also be a good point to exit short positions remains to be seen.
 
SHORT TRADE
I am still holding short positions, but I did exit some of the short positions and transitioned into VXX. (This books a loss for the trade for tax purposes and maintains a bearish stance.) I caution again to take it easy on this high risk stuff.
 
MONEY TREND INDICATOR
My short-term Money Trend indicator can be volatile; Wednesday it is trending down more steeply; a bearish indication. 
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 51.8% Wednesday. It was 53.2% Tuesday. A number above 50% is usually GOOD news for the markets.
 
On a longer term, the 150-day moving average of advancing stocks dipped to 55.1%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator declined from -5 to -29.
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) fell to +102 Wednesday. (It was +218 Tuesday.) The 10-day moving average of the change in spread was minus-9. In other words, over the last 10-days, on average, the spread has decreased by 9 each day. Market Internals switched to negative on the market.


Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are usually right, but they are often late.  They are most useful when they diverge from the Index.  In 2014, using these internals alone would have made a 9% return vs. 13% for the S&P 500 (in on Positive, out on Negative – no shorting). 
 
LONG TERM INDICATOR
Wednesday the VIX and Price indicators were positive; Sentiment & Volume indicators were neutral. The long-term indicator is BUY; but keep in mind the important Buy-signal was in June and before that at the bottom in February (Too bad I was too stupid to follow my own system!). Now a BUY-signal just shows that the markets have been pretty good recently.  I think we are near a short-term Top so this is not a great time to buy.


MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
On 12 July I increased my invested position in my retirement account to 25% invested in stocks thru an S&P 500 Index fund (“C”-fund in the TSP). I added to that position Thursday 21 July bringing my invested total up to 40% in stocks.  I expect to add more stocks should we get the anticipated pullback.
 
The NTSM system indicated Buy at the 11 Feb bottom; and again 2-days after the bottom on high up-volume; and from 22 Feb thru 25 April. I ignored the early signals convinced that it was a bear market bounce; I ignored more recent signals due to overbought conditions.  I’m following my system now, especially since the Index has climbed above my initial sell-point of 2100 on the S&P 500 back in November 2015.