Wednesday, June 5, 2013

ADP Hiring so-so

“Companies in the U.S. hired fewer workers than projected in May as federal budget cuts and higher taxes stifled greater improvement in the labor market.  The 135,000 increase in employment followed a revised 113,000 gain in April that was smaller than initially estimated, the ADP Research Institute reported today.
…“The job market continues to expand, but growth has slowed since the beginning of the year,” Mark Zandi, chief economist at Moody’s Analytics Inc., in West Chester, Pennsylvania, said in a statement.”

“These first signs of investors’ losing of faith in Japan’s bond market not only spell trouble for the world’s third largest economy. They’re also likely to prove a prelude to what will later happen in other developed markets, including Europe and America…
…Because stimulus has failed to kick-start economies, government debt in developed markets has continued to skyrocket, and total debt remains on an uptrend too. In fact, total debt to developed market GDP is 270%, 21 basis points higher than it was in 2008!
…In many respects, Japan is the template for what’s to come in other developed markets. After an enormous credit bubble which burst in 1990, Japan has refused to restructure its economy in order for it to grow in a sustainable manner. Instead, it’s chosen the less painful route of printing money to try to revive the economy and reduce debts in yen terms.”  James Gruber from Kitco Commentary at…

Wednesday, the S&P 500 closed down 1.4% to 1609 (rounded).

VIX rose 8% to 17.50. 

Wednesday was “statistically significant” based on analysis of the size of today’s price-volume action.  This stat is usually somewhere around a 1%-day.  It means that since today was down, tomorrow has a high probability (62%) of ending up. 

Further, we’ve only had 3-positive days in the last 2-weeks, so we are due for some sort of bounce, even if only for a day or two.  A bounce followed by further decline is likely.

Internals continue down with no sign of a turn-around yet. 

Tuesday, the overall NTSM analysis remained SELL at the close, based on SENTIMENT, VOLUME, and VIX.  That’s pretty good confirmation. The best indicators in the NTSM system are Volume and VIX.

The Sentiment indicator remains extreme negative at 71%-bulls for the 5-day moving-average at Wednesday’s close.  Unbelievable!  But perhaps they will be right tomorrow – futures are up as I write this.   

I remain about 20% invested in stocks as of 5 March (S&P 500 -1540).  My reasoning may be found at…(although that probably looks pretty lame by now.)
The NTSM system sold at 1575 on 16 April.  (This is just another reminder that I should follow the NTSM analysis and not act emotionally – I am under-performing my own system by about 2%!)

I have no problems leaving 20% or 30% invested.  If the market is cut in half (worst case) I’d only lose 10%-15% of my investments.  It also hedges the bet if I am wrong since I will have some invested if the market goes up.  No system is perfect.