WASHINGTON – “…The Bureau of Economic Analysis on Thursday revised down the nation’s economic growth in the second quarter to a measly 1.3% annual rate…
On Thursday, the Census Bureau said new orders for longer-lasting durable manufactured goods plunged 13.2% in August, compared with a 3.3% increase in July…Analysts said, “Don’t panic,” as it was largely due to an unusually big drop in airplane orders…excluding aircraft, August (still) marked the third month in a row of declining unfilled orders.” Full story at…
http://www.latimes.com/business/money/lat-fi-mo-economy-gdp-20120927,0,7837913.story
Last year about every
analyst commented that growth below 2% was economic “stall speed” that almost
always resulted in recession. Is this
time different? I see no point in trying
to answer the question. (It would just
be a guess.) I don’t think the
economists know either.
JOBLESS CLAIMS
From MarketBeat, the
WSJ.com“The one hopeful sign this morning came from jobless claims, which tumbled by 26,000 to 359,000, the lowest level since July. Claims had been creeping higher in recent weeks, so this is a good a sign. But expectations are still pretty downbeat for the next monthly jobs report, due one week from tomorrow.” Full story at…
http://blogs.wsj.com/marketbeat/2012/09/27/gdp-revision-durable-goods-ouch/?mod=google_news_blog
Employment numbers have
gone up right before that last recessions so I am not sure why the financial
press makes such a big deal of the employment number. John Hussman, PhD, (Hussman Funds) has
discussed this anomaly at length.
MARKET
RECAP
Thursday the S&P 500
finished UP 1% to 1447 (rounded). VIX fell
12% to 14.84.
Yesterday the S&P 500
bounced off the bottom trend line and that’s a positive sign and I suspect is
the biggest reason for the bounce today.
NTSM
The
NTSM analysis switched to BUY Thursday.
While
I have been hoping to get an opportunity to get more money invested in stocks,
there are plenty of reasons not to do it now.
Since NTSM analysis can turn quickly, the buy signal now is certainly
not as meaningful as a buy signal at a bottom.
The NTSM Sentiment indicator is also cause for some concern. (Sentiment is a counter indicator – extreme
bullish sentiment is bearish for the markets.)
The NTSM sentiment indicator
tracks the amount of money invested in long and short, leveraged Guggenheim
(formerly Rydex) Funds. The %-bulls
sentiment indicator is 62% bulls as of yesterday. (Guggenheim posts their Fund
data late so my sentiment number is almost always a day late.) That’s fairly high since the sell signal is
now only 67%. (NTSM sentiment buy/sell
points vary with a statistical analysis of market action.) That’s just one indicator though and the NTSM
analysis uses an ensemble approach. By
itself Sentiment won’t trip NTSM to a sell and more importantly, sentiment is
not accurate enough to trade.
Sentiment is often late to
call a top because extreme values of sentiment frequently occur after the top
is in. That’s because after the top, when
the markets fall, the buy-the-dip crowd will move in and push sentiment higher.
In addition to sentiment,
there is another technical item of concern; statistical analysis of the
price-volume action last month indicated an extreme level of complacency and
calm market action. This can sometimes
be the calm before the storm.
Last, there’s plenty of
the disconcerting news. I can’t bring
myself to buy more stocks now.
“What’s the matter McFly?…Chicken?” Well, yes.
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 currently have a 50%
stock allocation overall. For my age,
that is what many advisors recommend as a fully invested position, however, I
am normally much more aggressive. I have
less invested in stocks now because there’s a lot of risk.
