“First-time claims rose by 16,000 to 360,000 in the week ended July 6 from a revised 344,000, Labor Department figures showed today in Washington…’July claims numbers get totally bounced around by the auto-plant shutdowns,’ said Brian Jones, senior U.S. economist at Societe Generale in New York, who correctly forecast the level of claims. ‘The labor market is showing steady progress. The pace of hiring is good.’” Story at…
http://www.bloomberg.com/news/2013-07-11/jobless-claims-in-u-s-unexpectedly-climbed-to-two-month-high.html
MORE ON EMPLOYEMENT – PART TIME VS FULL TIME (Doug Short)
The following chart from Doug Short tells quite a
story. For additional charts and
analysis see dshort.com at… http://advisorperspectives.com/dshort/commentaries/Full-Time-vs-Part-Time-Employment.php
DIVERGING DEBATE ON WHEN TO END STIMULUS (NY Times)
“Mr. Bernanke said last month, after the most recent
meeting of the Fed’s policy-making committee, that the central bank planned to
gradually taper its monthly bond purchases starting later this year and ending
in the middle of next year, so long as economic growth continues.
But “about half” of the 19 officials who participated in
the policy meeting said in an internal survey beforehand “that it likely would
be appropriate to end asset purchases late this year,” according to an account
of the meeting that the Fed released Wednesday after a standard delay.” Story at…
http://www.nytimes.com/2013/07/11/business/economy/rising-chorus-at-the-fed-to-end-stimulus-sooner.html?ref=business&_r=1&
Not all 19 are voting members. Only 12 vote so it is not likely that QE will
end until Bernanke decides it will.
MARKET MANIPULATION (Wall Street Journal print edition)
Newedge, a NY brokerage firm, was fined $9.5 million for
failing to provide oversight of traders using its trading platform. This allowed market manipulation by computer
driven trading firms. Newedge is one of
the largest futures brokers in the world and is third in customer deposits.
(Story from WSJ reports)
This isn’t a fair market; there isn’t much doubt about
that. Using price-volume statistics for
the S&P 500, I have compared the 1980’s to the present. They aren’t the same. The 80’s were more random. Today, computers exploit small advantages and
that magnifies price movement. Computers
watch social media and blogs and use the sentiment to advantageously drive
prices one way or the other. Can you say
“Flash-Crash?” So why am I still
playing? It’s the only game in town.
MARKET REPORT
Thursday, the S&P 500 was up 1.4% to 1675 (rounded), a new high.
VIX was down about 1.4% to 14.01 Thursday, the S&P 500 was up 1.4% to 1675 (rounded), a new high.
Thursday was “statistically significant” so
odds favor a down day tomorrow and some retracement.
The S&P 500 is once again more than 10%
above its 200-dMA. That is an elevated
number that is in the range of short-term tops.
I would estimate that the upside is about 2-5%; the downside… 20%. Given those risk-reward options, I continue
to remain out of the market.
DÉJÀ VU: 2011
So far, market action is reminiscent of the
summer of 2011. In 2011 the S&P 500 peaked
in the end of April. It made a
preliminary bottom on 24 June (down 4% from the high); rallied to near the
prior high in 9-days and collapsed to a final bottom in October.
This time the S&P 500 made a top in Mid-April. It made a bottom on 24 June (coincidentally
the same date as 2011) down 6% and has rallied over the last 12-days to get
back to the prior high. If we follow the
2011 script, the final bottom would be in the Fall, with a low around 1335. It is not likely that we will follow that
script exactly, especially since VIX is lower this time, but only time will
tell…
NTSM
Thursday, the overall NTSM analysis remained
HOLD at the close. (The last BUY signal
was 1 February. That’s a long dry spell
without a buy.)
MY INVESTED POSITION
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.
