“Gross domestic product grew at a 3.6 percent annual rate instead of the 2.8 percent pace reported a month ago, the Commerce Department said on Thursday. It was the biggest gain since the first quarter of 2012, but inventories accounted for almost half of the increase in growth…"I am not prepared to interpret the revised third quarter number as an indication that the economy is on a much stronger track," Atlanta Federal Reserve Bank President Dennis Lockhart, a policy centrist at the central bank, told reporters.” Full story at…
http://www.reuters.com/article/2013/12/05/us-usa-economy-idUSBRE9B40KJ20131205
REAL PER CAPITA GDP (Doug Short)
Doug has a good discussion of GDP adjusted for population
with trend analysis and history at…http://advisorperspectives.com/dshort/updates/Real-GDP-Per-Capita.php
JOBLESS CLAIMS FALL SHARPLY (USA Today)
“Initial jobless benefit applications fell 23,000 to
298,000 the week ending November 30, the lowest in nearly three months. The
four-week moving average, a more reliable measure that smooths out volatility,
declined 10,750 to 322,250.” Full story at…http://www.usatoday.com/story/money/business/2013/12/05/jobless-claims-fall/3877157/
REGARDING TOMORROW’S JOBS NUMBERS (CNBC)
“Art Cashin says traders now see a gain of 190,000 to
200,000 for November non-farm payrolls as "neutral" for stocks…Cashin,
UBS' director of floor operations at the NYSE, told CNBC's Bob Pisani around
midday that if tomorrow morning's jobs report from the government shows an
increase of 210,000 or more, and the 10-year U.S. note yield rises above three
percent as a result, stocks could be hurt…3% is critical. While they are talking taper, the bond market
may take care of business.” Video at…http://www.cnbc.com/id/101250485
GOOD NEWS IS BAD NEWS
As noted previously, good news is bad news for the market
because good news worries investors that the FED may reduce its purchasing of
Bonds. That was the case today.
MARKET REPORT
Thursday, the S&P was down about 0.4% to 1785 (rounded).
VIX was up 3%
to 15.08. Options players remain relatively unconcerned. Thursday, the S&P was down about 0.4% to 1785 (rounded).
The 50-dMA on the S&P 500 is 1750; the 200-dMA is
1656. Those are 2-points where this
pullback may stall, if it even manages to get that far. Like every small retreat in the past, this pullback
doesn’t look real. There has been late-day buying for three days straight. Options players are quite sanguine, but the
low in the recent VIX is about where it has been before pullbacks in the
neighborhood of 5%. It looks like the
S&P 500 wants to drop back to the 1700-1750 area based on recent history.
Longer-term history would suggest a bigger correction;
but longer-term indicators (those based on pre-QE history) haven’t fared well
in the QE climate. Perhaps Friday’s jobs
report will be telling. Watch the
futures around 8:30 AM when the non-Farm payrolls report for November will be
published. If this week’s action is any guide, good news (greater than 210,000 jobs)
will be bad news for the markets.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing remained 49%
at the close Thursday. (A number below 50%
for the 10-day average is generally bad news for the market.)
New-lows outpaced new-highs Thursday, leaving the spread
(new-hi minus new-low) at minus-75 (it was -26 Wednesday). The 10-day moving average of change in the
spread was minus 8. In other words, over
the last 10-days, on average, the spread has decreased by 8 each day.
This trend following indicator is neutral on the market in
the short term, because the volume in rising stocks has been improving. It was negative yesterday. The
new-high/new-low data is deteriorating, so it is too early to say whether the
internals will reverse.
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
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 now under-performing my own system by about 6%!) 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.
