Monday, July 1, 2013

Best Hiring in 5-Years

U.S. Job Creation Best in Five Years (Gallop)
“More workers report that their employers are hiring; fewer see people being let go:

The net job creation score is based on 37% of workers telling Gallup that their employer is hiring new people and expanding the size of its workforce, and 15% saying their company is letting people go and reducing the size of its workforce. The percentage "hiring" is the highest since August 2008 and the percentage "letting people go" is the lowest since March 2008.”  Full release at…

That’s good to hear, but we’ve got a long way to go.  The Labor force participation rate is at all-time lows.  The participation rate is simply the work force (including those looking for work) divided by the population.  (Actually, it’s non-institutionalized population, but that can’t really be a significant part of the population.)  Details and chart at BLS…

“The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index jumped 2.3% in May after falling 0.2% in April...Year-to-date, compared with the same period in 2012, the tonnage index is up 4.5%...“While we heard good reports regarding freight levels during May, I have to admit I am a little surprised at the large gain in tonnage,” Costello said. He added that tonnage continues to outpace the number of loads hauled as heavy freight (e.g., housing construction materials and sand and water for hydraulic fracturing) is outperforming box trailer (i.e., dry van) freight.”   ATA Press release at…

And some are still calling a recession??

“Market internals remain broken here [as of Friday]. That may change, and it might even change soon. Until it does, we would be inclined to tread carefully, because this may be the highest level investors will see on the S&P 500 for quite some time. Choosing between potential catalysts - credit strains in China, the risk of disappointing earnings, or economic weakness, the incoming data is consistent with one conclusion: all of the above...our concerns about the equity market are not driven by...[recession]...Instead, we’re concerned about a host of reliable, testable, historically validated measures that – in combination – are associated with a dismal estimate of prospective return/risk here.”  - John Hussman, Phd from Hussman Funds Weekly Market Commentary at

Internals were higher today.  The 10-dMA of advancers is now 52% while the 20-dMA is just below 50%.  153 stocks made new-highs and only 6 made new lows.                 
The concern that last Monday (24 June 2013) may have been the bottom due to the new-high/new-low reversal on Tuesday, remains.  I have suggested that the Sentiment was too high, but there are no guarantees.  With the rest of the world in the toilet it is always possible that the market could’ve reversed with extreme high sentiment and is now marching to new all-time highs. 

But there is more than Sentiment; another negative on the markets is the panic indicator that flashed sell on 20 June.  In the end, internals show where the market is going so we’ll look for reversals elsewhere, because so far, the internals keep indicating the market is likely to go higher.

At this point I am watching the charts to see if the upper trend line will be broken.  Today the S&P 500 finished around the upper trend line. (There’s almost always some judgment involved regarding the location of the upper trend line.)  There are different rules for deciding on a trend-line break and it is up to each trader to decide which to use.  The smart thing would be to test a number of rules and pick the best one, but I’ve never had the time or inclination.  Here are two:
1) The index must close above the trend line on 2-successive days.
2) The index must close 3% above the trend line.
If the Index can meet one of above tests for a trendline break, then the market is likely to continue up.  Otherwise, a reversal down is likely.

A reversal to the downside, at this point, may also be signaled by a big up-day, say around 1.5%.

Monday, the S&P 500 was up 0.5% to 1615 (rounded).
VIX was down 3% to 16.34.

Monday, the overall NTSM analysis was HOLD at the close, but just barely.

I remain about 20% invested in stocks as of 5 March (S&P 500 -1540).  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.