DURABLE GOODS ORDERS
BLOOMBERG - Orders Signal Slowdown in U.S. Business
Spending: Economy
“A slump in June orders
for equipment such as computers and machinery signals U.S. business investment
will probably cool in the second half of the year and contribute less to the
economic expansion…Bookings for non-defense
capital goods excluding aircraft, a proxy for future corporate spending,
dropped 1.4 percent, the third decrease in the past four months, according to
Commerce Department data issued today in Washington.”
The following chart (from
the Federal Reserve) shows an increase in orders, but that’s only if airplane
orders are included.
MARKET
Thursday
the S&P 500 finished up 1.7% to 1360. The VIX fell over 9% to 17.5.
I
have been suggesting that the market would move up, so it is always interesting
when there is a significant move up on news.
This time, the news was that the ECB will begin another round of bond
buying that will reduce borrowing costs for troubled Spain and Italy. Technically though, the market internals and
indicators that I track had already signaled that the market would probably
move up. This always makes me ponder
whether the pros buy on inside information.
Perhaps, it’s simply that the pros can better interpret the impact of
news on the market.
That’s
why I have chosen to focus on tracking the market (thru NTSM analysis) rather
than the news or the economy. Hopefully,
the market itself will continue to give us clues about future direction. It’s
never perfectly clear, and I’ll rarely make a call at the exact top or bottom,
but with skill and a little luck, I usually can avoid trouble.
At
this point, I think the S&P 500 can move up another 5% or so. If it does, we’ll see where it goes after
that. Remember, the NTSM analysis doesn’t
predict the future, so 5% is mostly guesswork.
To
add a little to yesterday’s blog, I think the market is moving up because the
rest of the world is buying US stocks.
We look like the best dog in the pack (a rather ragged pack I might add). I don’t
think that will last. My guess is that earnings of US
companies will fall and stock prices will eventually follow, but I don't know when.
NTSM
The
NTSM analysis was BUY at the close on Thursday.
MY INVESTED POSITION
Based on the BUY signal, 6
July, I moved back into the market on 9 July (after the weekend) at S&P 500
1352. I now have a 50% stock allocation
overall. I am underweight my usual
aggressive allocation for stock because there’s a lot of risk now.
