Friday, September 23, 2016

Leading economic Indicators … Stock market Analysis

LEI (Conference Board)
“The Conference Board Leading Economic Index® (LEI) for the U.S. declined 0.2 percent in August to 124.1 (2010 = 100), following a 0.5 percent increase in July, and a 0.2 percent increase in June. “While the U.S. LEI declined in August, its trend still points to moderate economic growth in the months ahead,” said Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board.” Press release at…
More from Advisor Perspectives at…
 
MARKET REPORT / ANALYSIS        
-Friday the S&P 500 was down about 0.6% to 2165 at the close.
-VIX was up about 2% to 12.29 at the close.
-The yield on the 10-year Treasury slipped to 1.62%.
 
Indicators I mentioned yesterday are still pointing up. My sum pf 16-indicators remained at +4.  On a 10-day basis it has improved a lot. I remain short-term bullish. Longer term I am hold-my-nose bullish.
 
TRADING PORTFOLIO
My Trading Portfolio is small and I enjoy playing.  Keep it small; don’t bet your retirement on trading. Further, these are my trades and are provided as information and entertainment only. (Have a laugh at my bad trading!)
That said…
I bought the 2x S&P 500 ETF (SSO) Thursday, 22 Sep in the trading portfolio. Even with the recent 7% gain on the VXX trade I need to make up some ground due to the shorts I held too long.
 
Short–term trading is based on 4-indicators: Chart analysis; Sum of 16-Indicators; Money Trend; & Smart Money (late-day trading). THIS IS EXPERIMENTAL; I HAVE NOT BEEN ABLE TO BACKTEST THIS SHORT-TERM TRADING SYSTEM DUE TO THE JUDGEMENT REQUIRED AND THE DIFFICULTY AUTOMATING THE SIGNALS.
 
FRIDAY MARKET INTERNALS (NYSE DATA)
-10-day moving average of the percentage of stocks advancing (NYSE): 55.5% (52.9% Thursday) A number above 50% is usually BULLISH for the markets short-term.
-150-day moving average of advancing stocks: 54.9%.
  (A value above 50% indicates an up-trend.)
- McClellan Oscillator: dropped from +40 to +14 (percentage calculation method).
- New-highs minus new-lows: +77 (It was +153 Thursday.)
-10-day moving average of the change in spread: +7.
  In other words, over the last 10-days, on average, the spread has increased by 7 each day. (New-high/new-low data is now bullish confirming the bullish view of other indicators.)
 
Market Internals switched to positive 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. Volume, VIX & Sentiment indicators were neutral. Overall the long-term indicator remained HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I increased stock allocation to 50% stocks in the S&P 500 Index fund (C-Fund in the TSP) Thursday, 22 Sep in my long-term accounts based on a number of indicators other than Long Term.

Thursday, September 22, 2016

Unemployment / Jobless Claims … Home Sales … Stock Market Analysis

JOBLESS CLAIMS (Bloomberg)
“Filings for U.S. unemployment benefits dropped last week to match the lowest level since April, a sign the labor market remains healthy even as hiring moderates. Jobless claims declined by 8,000 to 252,000 in the week ended Sept. 17…” Story at…
 
HOME SALES FALL (ABS News)
“Americans retreated from home-buying in August, as a worsening inventory shortage appears to be hurting sales and pushing prices higher…Americans retreated from home-buying in August, as a worsening inventory shortage appears to be hurting sales and pushing prices higher.” Story at…
 
MARKET REPORT / ANALYSIS        
-Thursday the S&P 500 was up about 0.7% to 2177 at the close.
-VIX was down about 10% to 12.02 at the close.
-The yield on the 10-year Treasury dipped to 1.63%.
 
As I wrote yesterday, quite a few indicators are signaling a bullish move from here: Smart Money (last hour trading) is looking up and has switched to a bullish stance; Money Trend reversed to the upside; New-highs are bouncing from their lows and Thursday, new-high/new-low data confirmed the upward move in the markets; Chart wise, the S&P 500 bounced from its lower trend line and is headed up; VIX continues to fall; My daily sum of 16-indicators improved from -2 to +4 (+4 is a bullish stance.). Finally, up-volume was elevated Wednesday and Thursday (89% and 77%) and that’s bullish.
 
I am bullish now and I added to long-term and short-term stock investments Thursday as noted below. New highs are in the cards.
 
TRADING PORTFOLIO
The Trading Portfolio is small and I enjoy trying to beat the market.  Keep it small; don’t bet your retirement on trading. That said…
I bought the 2x S&P 500 ETF (SSO) this morning in the trading portfolio. Even with the recent 7% gain on the VXX trade I need to make up some ground for the shorts I held too long.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) improved to 52.9% Thursday. It was 49.1% Wednesday. A number above 50% is usually BULLISH for the markets short-term.
 
On a longer term, the 150-day moving average of advancing stocks climbed to 55.2%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator improved from +12 to +40 (percentage calculation method).
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) improved to +153 Thursday. (It was +52 Wednesday.) The 10-day moving average of the change in spread was -2. In other words, over the last 10-days, on average, the spread has decreased by 2 each day. (New-high/new-low data reversed to the upside and is now bullish confirming the bullish view of other indicators.)
Market Internals remained neutral on the market, but I am quite bullish. This indicator is likely to be positive tomorrow if the market continues upward.
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 indicator was positive. Volume, VIX & Sentiment indicators were neutral. Overall the long-term indicator remained HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I increased stock allocation to 50% stocks in the S&P 500 Index fund (C-Fund) Thursday, 22 Sep in my long-term accounts based on a number of indicators other than Long Term.

Wednesday, September 21, 2016

FOMC Rate Decision … Crude Inventories … Freight Shipments Down Again … Stock Market Analysis


FOMC (Yahoo Finance)
The FED statement follows: “Blahblahblahblah…rates unchanged… blahbahblah…data dependent…blahblahblah.”
“The Federal Reserve once again pushed back plans to raise interest rates on Wednesday, a widely expected move following a series of mixed economic reports and varied signals from Fed officials. After its two-day policy meeting, the Federal Open Market Committee voted to hold the federal funds rate between 0.25% and 0.50%, citing progress in economic and labor market growth and an improving risk outlook.” Story at…
 
CRUDE INVENTORIES (Reuters)
“Oil prices rose up as much as 3 percent on Wednesday after a third surprise weekly drop in U.S. crude stockpiles helped assuage fears over a global oil glut. A weaker dollar .DXY after the Federal Reserve's decision to leave U.S. interest rates unchanged and an oil workers' strike in Norway that threatened to cut North Sea crude output further boosted oil.” Story at…
 
CASS FREIGHT INDEX (CASS Information Systems)
“August’s Cass Freight Index continued to signal that overall shipment volumes (and pricing) are persistently weak, with increased levels of volatility as all levels of the supply chain (manufacturing, wholesale, retail) continue to try and work down inventory levels.” Press release at…
My cmt: Shipments were down 1.1% and Expenditures were down 6.3% on a year-over-year basis. This isn’t inspiring and both data-series continue to deteriorate.
 
MARKET REPORT / ANALYSIS        
-Wednesday the S&P 500 was up about 1.1% to 2163 at the close.
-VIX was down about 16% to 13.3 at the close.
-The yield on the 10-year Treasury dipped to 1.67%.
 
Quite a few indicators are signaling a bullish move from here: Smart Money (last hour trading) is looking up and has switched to a bullish stance; Money Trend reversed to the upside, although just barely; New-highs are bouncing from their lows; Chart wise, the S&P 500 bounced from its lower trend line and is headed up; VIX has pulled back.
 
All in all, since the Index is just coming out of a correction I think we go up from here based on the reversals of indicators I’ve mentioned. Overall, my sum of 16-indicators improved from -7 to -2. 
 
Assuming indicators remain looking up, I’ll add to long-term and short-term stock investments.
 
SHORT TRADE
I’ve closed short positions.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) improved to 49.1% Wednesday. It was 46.7% Tuesday. A number below 50% is usually BEARISH for the markets short-term.
 
On a longer term, the 150-day moving average of advancing stocks climbed to 55%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator improved from -25 to +12 (percentage calculation method).
 
New-highs outpaced New-lows. The spread (new-highs minus new-lows) improved to +52 Wednesday. (It was +7 Tuesday.) The 10-day moving average of the change in spread was -18. In other words, over the last 10-days, on average, the spread has decreased by 18 each day. (Overall, New-high/new-low data still points down, but its rate of decline slowed.)
Market Internals switched 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
Wednesday the Price indicator was positive. Volume, VIX & Sentiment indicators were neutral. Overall the long-term indicator remained HOLD.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I reduced stock allocation to 30% stocks in the S&P 500 Index fund (C-Fund) Wednesday, 14 Sep in my long-term accounts based on the Sell signal on 13 Sep. I’ll increase to 50% invested Thursday.

Tuesday, September 20, 2016

Housing Starts … Decline of the Middle Class … Nowhere Near a Major Top … Stock Market Analysis

HOUSING STARTS (Bloomberg)
New U.S. home construction fell more than projected in August as a plunge in the South, the biggest region for building, more than offset gains in the rest of the country. Residential starts declined 5.8 percent to a 1.14 million annualized rate…” Story at…
 
THE DECLINE OF THE MIDDLE CLASS (Advisor Perspectives)
Median is the point at which half of US incomes are higher and half are lower. As Doug Short notes, it is the middle. The Middle was 90% of the average in 1967.  Now it’s only 70% of the average income. The Middle Class has lost a lot of ground. Commentary at…
 
NOWHERE NEAR A MAJOR TOP (Financial Sense)
"We continue to be a little bit cautious over the short-term while the S&P 500 trades under 2150-2160... [and] our advice to investors is at least for the next few weeks heading into the September-October window is to remain a bit cautious, expect higher volatility over the short-run but at the same time get your shopping list together because at the end of the day we think this is a temporary setback, which is going to give us another buying opportunity quite frankly at a better price point in what we believe is an ongoing secular bull market here in the US." Commentary at…
My cmt: I doubt that the market is in a cyclical bull market.  PE’s are at levels usually associated with the start of a Bear not a Bull.  Still, that doesn’t mean that Markets won’t go higher.
 
MARKET REPORT / ANALYSIS        
-Tuesday the S&P 500 was up one point to 2139 at the close.
-VIX was up about 3% to 15.92 at the close.
-The yield on the 10-year Treasury remained 1.7%.
 
The Market has been in a holding pattern this week. Currently, indicators are pointed down and my collection of 16-indicators dropped from -4 to -7. Money trend is slightly down.
 
Overall the most likely market direction is down, but signals are not very strong. The market is waiting for the FED meeting to end Wednesday. A drop below the prior low of 2126 on higher volume would confirm that the pullback is likely to continue. I thinks it’s 50-50 whether we go up or down in the near term.
 
SHORT TRADE
I am still holding short positions in SH (about half my prior position) and QID (sold some today).
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) dropped to 46.7% Tuesday. It was 48.2% Monday. A number below 50% is usually BEARISH for the markets short-term.
 
On a longer term, the 150-day moving average of advancing stocks dipped to 54.7%. A value above 50% generally indicates an up-trend.  The McClellan Oscillator declined a little from -20 to -25 (percentage calculation method).
 
New-highs outpaced New-lows, but just barely. The spread (new-highs minus new-lows) dropped to +7 Tuesday. (It was +50 Monday.) The 10-day moving average of the change in spread was -15. In other words, over the last 10-days, on average, the spread has decreased by 15 each day. New-high/new-low data resumed pointing sharply down, .
Market Internals turned 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
Tuesday the Price was positive. Sentiment & VIX indicators were neutral; and Volume was negative. Overall the long-term indicator remained HOLD. A significant drop would probably send the indicator back into SELL status.
MY INVESTED STOCK POSITION:
TSP (RETIREMENT ACCOUNT – GOV EMPLOYEES) ALLOCATION
I reduced stock allocation to 30% stocks in the S&P 500 Index fund (C-Fund) Wednesday, 14 Sep in my long-term accounts based on the Sell signal on 13 Sep.
 
I’ll switch back to BUY-mode soon if short-term indicators turn up, assuming the long-term indicators remain OK.
 
This is a very conservative view given that market conditions seem relatively sanguine right now. Since I am retired, my conservative position is reasonable for me and I sleep well. Additionally, I have missed opportunities recently by ignoring my system and for now I will follow the system.