“The Institute for Supply Management said Tuesday its purchasing manager’s index rose to 56.2% from 55.7% in August, topping the 55% expected in a MarketWatch-compiled economist poll. That’s the highest level since April 2011…“We were projecting a pick-up in growth in [the fourth quarter], although that may now be blunted if the government shutdown lasts more than a week or two, and even in the factory sector, we’d like to see some of the ISM enthusiasm show up in actual orders data,” said Avery Shenfeld of CIBC World Markets Economics in a note to clients.” Story at…
http://www.marketwatch.com/story/september-ism-factory-index-hits-2-year-high-2013-10-01
…but not everyone was happy…
MARKET HAS MORE TO WORRY ABOUT THAN THE SHUTDOWN (CNBC)
[A few are:] “…substantially weakening technical factors,
as well as an economy that has underperformed and perhaps even ratified the Federal Reserve's decision not to begin cutting
back on its monthly bond-buying program…”“… the slopes of the last three rallies have been very steep, looking more emotionally driven…than technically or fundamentally driven...
…a head-and-shoulders formation on the S&P 500 chart…
…Just as it looked like growth was hitting sustainable levels, a batch of indicators last week indicated much work needs to be done. Of the 22 data releases over the period, 16 came in weaker than forecasts while only four registered positive surprises, according to Bespoke Investment Group.” Full story from CNBC at…
http://www.cnbc.com/id/101073240
EARNINGS PER SHARE GUIDANCE: MORE THAN 80% NEGATIVE FOR
Q3 (Factset)
“At this point in time, 108 companies in the index have
issued EPS guidance for the third quarter. Of these 108 companies, 89 have
issued negative EPS guidance and 19 have issued positive EPS guidance. As a
result, 82% (89 out of 108) of the companies that have issued EPS guidance for
the third quarter have issued negative EPS guidance. This percentage is
consistent with the percentage recorded in the previous quarter at this time
(81%), but well above the 5-year average of 62%.” FactSet Earnings report at…http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_9.27.13
…and China isn’t the bright spot many were celebrating
just a short while ago.
CHINA MANUFACTURING NEARLY FLAT (CNBC)
“China's factory activity expanded at a
slower-than-expected pace in September, a private survey showed on Monday,
calling into question the strength of the recovery in the world's second
largest economy. The HSBC Purchasing Managers' Index (PMI) came in at 50.2…”
Story at…http://www.cnbc.com/id/101071631
A number above 50
indicates expansion so China’s manufacturing growth is basically
non-existent. Don’t believe the China
comeback stories, yet. China is a center
of world manufacturing; this just indicates that the World economy is not as
rosy as many would have us believe.
MARKET REPORT
Tuesday, the S&P finished up 0.8% to 1,695 (rounded) at the close.
VIX was down 6% to 15.54.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing on the NYSE
remained 51% Monday. (A number above 50%
for the 10-day average is generally good news for the market.)
New-highs outpaced new-lows Tuesday, leaving the spread
(new-hi minus new-low) at +177 (it was +30 Monday). The 10-day moving average of change in the
spread is plus 5. That just means that over the last 10-days, the spread has
been getting better, but not by much.
Market Internals are Positive on the market for this
short term indicator.
NTSM
Tuesday, the overall long-term NTSM analysis remains HOLD
at the close.
The 5-day, percent-bulls (bulls/(bulls+bears) in the
Guggenheim/Rydex funds I track remains 69%-bulls as of Friday’s close. That is
an extreme bullish value that is usually a negative for the markets.
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.
