Thursday, August 8, 2013

Jobless Claims UP, but Overall News is Good

NEW JOBLESS CLAIMS UP, BUT 4-WEEK MOVING AVERAGE DOWN (Reuters)  “A gauge of the trend in layoffs of American workers fell last week to its lowest since before the 2007-09 recession, a hopeful sign for the U.S. economy.

The four-week average of new claims for state jobless benefits dropped to 335,500, the Labor Department said on Thursday. The reading has not been that low since November 2007, just before the United States fell into a calamitous recession.
… Thursday's data still pointed to only modest economic growth. Last week, initial jobless claims edged 5,000 higher to 333,000, a little less than expected.

‘The overall economy and the labor market are improving at a moderate pace,’ said Lindsey Piegza, chief economist at brokerage Sterne Agee & Leach in Chicago.”  Full story at….

"We are starting to see weakening in breadth data that is suggestive of a possible short-term correction in the market. With the highly anticipated upcoming September 17-18 FOMC meeting, we could be in store for some volatility and market weakness.” Story at Advisor Perspectives at…

“The key thing for investors to watch is whether strength early in the trading day carries through to the end of the session’, he said.  ‘What happens late in the session is often more important than what happens early,’ Cashin said. ‘Early, you've got time to bluff. You can faint or do whatever, but when the clock is running out, you've got to do what you've got to do.’  Because the yield on the 10-year Treasury is declining, he said, market moves are ‘less about tapering talk and more about market internals.’”

I started tracking this because I thought following the “smart-money” might give some clues about the future.  Over the last 10-days, the trend has been down in the last hour of trading, but not by much.  In the last 10-days the S&P 500 index has traded down less than 1%, so it is not a very strong indicator at this point.  Today the index was down about 0.1% in the last hour of trading.

The 10-day moving average of stocks advancing on the NYSE is UP slightly to 46%.  Usually a value below 50% signals additional trouble for the markets. 66% of stocks on the NYSE were advancing today - not surprising for the up-day.  

New-highs new-lows reversed today.  No way to know if that trend will continue, but the internals are not giving a consistent signal regarding the market’s direction.

Thursday, the S&P was up 0.4% to 1697   (rounded).
VIX was down 2% to 12.73. 

The S&P 500 is again 10% above its 200-dMA – corrections frequently start at this level.  Chart-wise, the S&P 500 is now at its prior, lower trend-line.  I think a newer trend line has been established and the index is presently at its upper trend-line.  The charts aren’t helping too much, but the answer should be clear soon.

Thursday, the overall NTSM analysis was HOLD at the close. 

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.

I am committed to this course of action for some time.  Now; I think I just need to be committed!