Tuesday, July 23, 2013

Richmond FED Manufacturing Declines

“Today the manufacturing composite dropped back into contraction with a surprising 18 point decline to -11. Investing.com had forecast continuing expansion at 7.”
Story at Advisor Perspectives at http://advisorperspectives.com/dshort/commentaries/Richmond-Fed-Manufacturing.php

The Fed report Stated: “Shipments, new orders, backlogs, and capacity utilization
fell this month.”  This tends to be a volatile series so further data is required.

“There is absolutely no way Chicago, Oakland, Baltimore, Philadelphia, LA, Houston, and numerous other cities can meet pension obligations without a major restructuring of promises.

Given that public unions seldom if ever agree on even the smallest of pension concessions, expect many of those haircuts to happen in bankruptcy court...
…The bankruptcies in California cities and Detroit provide a backdrop of what's about to happen. In the meantime, expect an avalanche of city debt downgrades.”  For the full story see Global Economic Advisors at…


“It should go without saying that China and Russia have designs to end the U.S. Dollar hegemony and debtism free ride. This is fundamental to understand and will be a game changer. The impacts on the standard of living of these players will be profound and especially negative for the U.S….
…China has already advanced the Yuan as a principal exchange currency by incorporating a series of deal with other countries. Such arrangements are hardly mentioned by U.S. financial media, but they are going on constantly. So far, the People’s Bank of China (PBOC) has signed nearly 2 trillion yuan worth of currency-swap deals with 20 countries and regions, including Hong Kong.” Commentary at…

No good news today!

Tuesday, the S&P 500 was down 0.2% to 1692 (rounded). 
VIX was up 4% to 12.82.  

Again, today, Tuesday, there have only been 4-down days in the past month (including today) and that is overly bullish and suggests some retracement via a correction when combined with other indicators.

I said yesterday that there were signs in the market internals that indicate a possible downturn in the markets.  Today it seems the market internals have stalled, but it may still be premature to say they are confirming a move either way.  Actually, advancers outpaced decliners today by about 400 so this suggests an up day tomorrow rather than a correction start.

In the past, I have written that the S&P 500 is 11% above its 200-day moving average and that is problematic for the markets.  That is a good number to watch, but it can get a lot more advanced, so by itself, it gives guidance, but not tradable guidance.  The important thing is to watch a larger series of indicators to get a more complete picture of the market.  At the present time, I am bearish based on an ensemble of indicators.

Tuesday, the overall NTSM analysis remained SELL at the close.  (That stance has been wrong recently.  Will it be wrong again?)

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.