“Jobless claims in the U.S. declined last week to the lowest level since April 2006 as work on computer systems in two states caused those employment agencies to report fewer applications. First-time claims for unemployment insurance fell by 31,000 to 292,000 in the week ended Sept. 7, which also included the Labor Day holiday, according to Labor Department data released today in Washington. The median forecast in a Bloomberg survey called for 330,000 applications.” Story from Bloomberg at…
http://www.bloomberg.com/news/2013-09-12/jobless-claims-slump-as-two-u-s-states-upgrade-computer-systems.html
This was the big “non-story”
story for the day. The stats were
meaningless.
FED EXIT A “BIG DEAL” FOR THE
MARKETS (Bloomberg)
“Stanley Druckenmiller, who boasts one of the hedge-fund
industry’s best long-term track records of the past three decades, said it
would be a ‘big deal’ for financial markets if the Federal Reserve were to
completely end its asset purchases as outlined over the next 12 months. How in the world does anyone think when the
actual exit happens that prices are not going to respond?” Druckenmiller said
today on Bloomberg Television’s ‘Market Makers’… ‘if you tell me quantitative
easing is going to be removed over nine or 12 months, that is a big deal.’” Video and story at…http://www.bloomberg.com/news/2013-09-11/stan-druckenmiller-says-fed-exit-would-be-big-deal-for-markets.html
WORLD ECONOMY UPDATE (Advisor
Perspectives)
“It does not matter which way you look at it -- the
global economy has rebounded into growth territory…We can see this from the
percentage of countries posting positive quarter-on-quarter GDP growths....” Story at dShort.com, Advisor Perspectives at…http://advisorperspectives.com/dshort/guest/Dwaine-van-Vuuren-130912-World-Economy-Update.php
DEBT CEILING FIGHT – THE CHARADE CONTINUES (CNN/Money)
“Lawmakers are tied up in knots over increasing the debt
ceiling this fall. But they eventually will. The only question is how messy the
process will be. Why assume they'll
raise it? Because they have no real choice if they want to avoid a U.S.
default. A default would hurt the economy and markets, and most lawmakers know
this. That's why they regularly raise the debt ceiling before it comes to that.” Story at… http://money.cnn.com/2013/09/12/news/economy/debt-ceiling/index.html?iid=HP_LN
I expect the Markets will worry about the Debt fights
when they start to heat up..
MUSLIM FIRING WRONG AT ABERCROMBIE (CNN/Money)
“A federal judge in California ruled that Abercrombie
& Fitch violated the law in firing a Muslim employee for refusing to take
off her religious head scarf at work.”
Story at…http://money.cnn.com/2013/09/10/news/companies/abercrombie-muslim-discrimination/index.html?iid=HP_LN
Not really a surprise.
The law says employers must make “reasonable” accommodations for
religious beliefs.
MARKET REPORT
Thursday, the S&P finished down 0.34% to 1683 (rounded) at the close.
VIX was up 3% to 14.29.Thursday, the S&P finished down 0.34% to 1683 (rounded) at the close.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks
advancing on the NYSE dropped to 55% at the close Thursday. (A number above 50% for the 10-day average is
generally good news for the market.)
New-highs outpaced new-lows today, Thursday,
leaving the spread (new-hi minus new-low) at +68 (it was +114 Wednesday), with
the 10-day moving average of change in spread now falling.
The Internals are positive on the market.
SENTIMENT - ANOTHER WAY OF CALLING A TOP?
Sentiment, measured as a 5-dMA of funds bet
long vs. funds bet short (Bulls/(Bulls+Bears) in selected Guggenheim/Rydex
funds I track, is now at 50%-Bulls. This
is the first time Sentiment has been that low since March of 2012 so it looks
like traders are starting to agree that the correction isn’t over yet. (The %-bulls
stat is falling because more traders are betting short.) It was 65%-bulls at the recent top. The 65%-bull reading is indicative of a top;
but there might be another indicator related to sentiment.
Another stat that I keep on Sentiment is:
How often are traders right? In other
words if Rydex traders are bullish at the close, is the market up the next day
(and vice versa)? Over the last month, traders have been right 50% of the
time. A fair question results: How were
traders doing at the top when the market peaked 6-weeks ago? The day before the top, traders had been
right 75% of the time over the prior 20-days – in fact that was the peak. This is a reflection that in a rising market,
everyone goes long and makes money; as the market begins to turn and gets
choppy, traders aren’t nearly as successful. The trend was true at the top in May too.
This might be another indication of topping…or
not. I try not to make conclusions
without sufficient back-testing of the assumption. So the answer to the question, "Another way of calling a top?," is – Maybe; but don’t bet on
it.
NTSM
Thursday, the overall long-term NTSM analysis
remains 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.
