“Federal Reserve policy makers were ‘broadly comfortable’ with Chairman Ben S. Bernanke’s plan to start reducing bond buying later this year if the economy improves…’A few members emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases,’ the minutes show. ‘Almost all participants confirmed that they were broadly comfortable” with the committee moderating ‘the pace of its securities purchases later this year.’” Story from Bloomberg at…
http://www.bloomberg.com/news/2013-08-21/fomc-minutes-show-broad-support-for-bernanke-tapering-timeline.html
REVERSE REPO PLAN (HOW TO PULLBACK CASH FROM THE BANKS)
(Reuters)
“The Federal Reserve is
considering a new tool to help drain cash from the banking system and keep
short-term interest rates on target when it shifts from its current cheap-money
policy, minutes of the Fed's July policy meeting showed on Wednesday…creating a fixed-rate facility for overnight
reverse repurchase agreements, or reverse repos…’They are setting the
stage for an eventual policy tightening by sometime in 2015,’ said Mary Beth
Fisher, head of U.S. interest rates strategy at SG Corporate & Investment
Banking in New York.” Full story at…http://www.reuters.com/article/2013/08/21/us-usa-fed-minutes-repo-idUSBRE97K0ZN20130821?feedType=RSS&feedName=businessNews
IS THE US HEADED TOWARDS RECESSION? (dShort.com)
“A country experiences an economic slowdown when it's
industrial production lags, its jobs market shows a dismal performance, corporate profits deteriorate, and the
general standard of living declines. Sad
to say, this is exactly what the U.S. economy is experiencing right now…Learn
from history—the "Tech Boom" of the late 1990s and the credit crisis
of the mid-2000s are only two examples of how things can go terribly wrong so
very quickly. And that's why I expect this next recession to blindside
politicians and the mainstream media.”
Story from Advisor Perspectives at…http://advisorperspectives.com/dshort/guest/Michael-Lombardi-130821-Recession-Risk.php
RECESSION?
Perhaps, but I track the relative performance of the
Morgan Stanley Cyclical Index versus the S&P 500 Index as a proxy for the
market’s expectation of recession (since the cyclicals are more recession
sensitive). Currently, there is NO
expectation of recession by market participants.
INITIAL CLAIMS RISE BUT NEAR 6-YEAR LOWS (CNBC)
“Initial claims for state unemployment benefits climbed
13,000 to 336,000, just above the level expected by economists in a Reuters poll,
Labor Department data showed on Thursday…The claims report showed the number of
people still receiving benefits under regular state programs after an initial
week of aid rose 29,000 to about 3 million in the week ended Aug 10.” Story at…http://www.cnbc.com/id/100980548
LEADING INDICATORS SIGNAL GROWTH (24/7 Wall St.)
“The Conference Board has released its index of leading economic indicators (LEI). While the name
sounds like…a preview, it is a July number and we would caution that many of
the components inside the total tally are already known and visible before this
was released. July’s leading indicators were up by 0.6%, and Bloomberg was calling for a consensus
reading of 0.5%...The improvement in the LEI, and pick up in the six-month
growth rate, suggest better economic and job growth in the second half of 2013.
However, the biggest uncertainties remain the pace of business spending and the
impact of slower global growth on U.S. exports.” Story at…http://247wallst.com/economy/2013/08/22/leading-indicators-signal-more-growth-for-rest-of-2013/
MARKET REPORT
Thursday, the S&P was Up 0.9% to 1657 (rounded) at the close.
VIX was down 7% to 14.76. Thursday, the S&P was Up 0.9% to 1657 (rounded) at the close.
The S&P 500 is sitting at the 50-dMA. Statistically, there has been little increase
in price-volume action that would indicate a correction is underway so this
market may turn up again anytime...or not.
It’s not clear at this point so I am watching the clues. One set of clues is the Market Internals.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing
on the NYSE was 43% at the close and it is still trending down. Usually a value below 50% signals additional
trouble for the markets.
New-highs slightly outpaced new-lows today
leaving the spread at +3 with the 10-day change in spread still trending
slightly down.
Today’s reading of Internals is negative on
the market, but not as strong a signal as it has been.
NTSM
Thursday, the overall NTSM analysis was HOLD
at the close.
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.
