…Jobless claims in the week ended Nov. 23 declined 10,000 to 316,000, the fewest in two months, the Labor Department said today in Washington…“The decline in jobless claims is encouraging,” Michelle Meyer, senior U.S. economist at Bank of America Corp. in New York, said before the report. “The challenge has been to see a ramp up in hiring. Corporations have remained quite cautious.” Story at…
http://www.bloomberg.com/news/2013-11-27/jobless-claims-in-u-s-unexpectedly-fall-to-lowest-in-two-months.html
DURABLE GOODS ORDERS FALL (Reuters)
“The Commerce Department said on Wednesday non-defense capital goods
orders excluding aircraft, a closely watched proxy for business spending plans,
dropped 1.2 percent last month. It was
the second month of declines after orders for these so-called core capital
goods fell 1.4 percent in September…The unexpected drop in these orders
suggested some ebbing in the manufacturing sector's recently found strength. It
could also be an indication that a 16-day partial government shutdown last
month hurt business confidence.” Story
at…http://www.reuters.com/article/2013/11/27/us-usa-economy-durables-idUSBRE9AQ0NM20131127
LEADING INDICATORS UP – FASTER GROWTH AHEAD
“The leading economic index rose 0.2% in October, following even large
gains of 0.9% in September and 0.7% in August, the nonprofit Conference Board
said Wednesday.… seven of the 10 indicators tracked by the board increased. ‘The recent increase in the index supports our
forecast that the U.S. economy is poised to grow somewhat faster at 2.3% in
2014 compared to 1.6% in 2013,’ said Kathy Bostjancic, director of
macroeconomic analysis at the board.”
Story at…http://www.marketwatch.com/story/leading-indicators-point-to-faster-us-growth-2013-11-27
LOW RATES FOR LONGER – FED THEME FOR 2014 (Reuters) –
“The Fed under (Fed Chair nominee) Janet Yellen will be committed to a
very low federal funds rate for several more years," said Jake Lowery, Treasury
trader and portfolio manager for global interest rates at ING U.S. Investment Management... "That
commitment to low rates is much more important than the precise timing of
tapering," Lowery said, referring to potential reductions in the Fed's
large-scale purchases of U.S. Treasuries and mortgage-backed securities.” Story at…http://www.reuters.com/article/2013/11/25/us-usa-rates-lower-analysis-idUSBRE9AO0XK20131125
I have seen this view expressed by many.
I remain skeptical. QE keeps
longer term interest rates lower. Rising
long term rates should have consequences for the economy, but I am not an
economist. For detailed discussions of
QE…see the following:
QE?
Here’s a good site for QE analysis from Pragmatic Capitalism at…http://pragcap.com/understanding-quantitative-easing
OBAMACARE IMPACT – LESS JOB GROWTH THAN ANYONE THINKS
Mish Shedlock of Global Economic Trend Analysis has a detailed analysis
of the latest jobs data. He is
suspicious that discrepancies in the employment data (specifically differences
in the Household and Establishment surveys) are distorting the jobs
picture. See his blog at…http://globaleconomicanalysis.blogspot.com/2013/11/jobs-vs-employment-analysis-suggests.html
SENTIMENT – HOLY WOW!
I track Sentiment by calculating Bulls/(Bulls+Bears) using a
5-day-moving-average of the daily-assets, bet long or short, in selected
Rydex/Guggenheim funds. This gives a
%-Bulls value for sentiment. The funds I
currently use were not around during the dot.com bubble. For comparison purposes, I have looked at
funds bet long and short in 2-funds that did exist in 2000 and still exist
today. Those are the “NASDAQ-100® - Inv Class” fund and the “Inverse
NASDAQ-100® Strategy - Inv Class”.
Calculating a 5-day %-Bulls value gives the following values at prior
major tops:
3/24/2000 1st Major Top:
97%-Bulls
7/17/2007 1st Major Top:
89%-Bulls11/26/2013 (now): 99%-Bulls
By this measure, sentiment has exceeded the prior major tops in both the
dot.com Bubble and the Financial Crisis.
Holy wow!
MARKET REPORT
Wednesday, the S&P finished up 0.3% to 1807 (rounded) on low volume (30% below the norm for the month).
VIX was up 1%
to 12.95.Wednesday, the S&P finished up 0.3% to 1807 (rounded) on low volume (30% below the norm for the month).
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing remained to
54% at the close Wednesday. (A number above
50% for the 10-day average is generally good news for the market.)
New-highs outpaced new-lows Wednesday, leaving the spread
(new-hi minus new-low) at +154 (it was +179 Tuesday). The 10-day moving average of change in the
spread was plus 3. In other words over
the last 10-days, on average, the spread has increased by 3 each day.
Advancing volume is trending down slightly, so this trend
following indicator is neutral on the market in the short term.
Market Internals are a decent trend-following analysis of
current market action, but in 2013 (so far), if I had been buying the positive
ratings and selling negative ratings I would have under-performed a
buy-and-hold strategy.
NTSM ANALYSIS
Sentiment is EXTREME
negative at 75%-bulls for the 5-day indicator. (Three out
of four investors in Rydex/Guggenheim funds I track are betting long.) Overall, NTSM is neutral. 
(I am mostly out of the market already.)
MY INVESTED POSITION (NO CHANGE)
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 still lean toward getting back in, after a pullback, to
speculate on a final ride to the top.
NTSM did give several buy signals over the weeks of 14 and 21 Oct, but
the market just looks too frothy to rush back in…we’ll see if the market will
pullback so I can join the insanity. If
not, cash is fine.
