“Industrial production increased 1.1% in November after increasing an upwardly revised 0.1% (from -0.1%) in October. That was the largest increase since November 2012 …Manufacturing growth continued to accelerate in November. Levels returned to their pre-recession peaks and growth tracking the elevated readings found in the ISM Manufacturing Index.” Data charts and summaries at…
http://www.briefing.com/Investor/Calendars/Economic/Releases/indprd.htm
INDUSTRIAL PRODUCTION INCREASES 1.1%, MOST IN A YEAR
(BloombergBusinessweek)
“It does suggest that the manufacturing sector is gaining a little bit
of momentum,” said David Sloan, a senior economist at 4cast Inc. in New York,
who projected a 1.2 percent jump in overall production. “You’ve got a decent
underlying picture of respectable, if not terribly rapid, growth.” Story at…http://www.businessweek.com/news/2013-12-16/industrial-production-in-u-dot-s-dot-increases-1-dot-1-percent-most-in-a-year
THEY BRAVELY CHICKENED OUT (Euro Pacific Capital)
Earlier this week Congress tried to show that it is capable of tackling
our chronic and dangerous debt problems. Despite the great fanfare I believe
they have accomplished almost nothing….The Congressional Budget Office (which
many believe is too optimistic) projects that over the next 10 years the
Federal government will create $6.38 trillion in new publicly held debt
(intra-governmental debt is excluded from the projections). This week's deal is
projected to trim just $22 billion over that time frame, or just 3 tenths of 1
percent of this growth…So America blissfully sails on, ignoring the obvious fiscal,
monetary, and financial shoals that lay ahead in plain sight. I believe that
will continue this dangerous course until powers outside the United States
finally force the issue by refusing to expand their holding of U.S. debt. That
will finally bring on the debt and currency crisis that we have created by our
current cowardice.” – Peter SchiffPeter Schiff is the CEO and Chief Global Strategist of Euro Pacific Capital, best-selling author and host of syndicated Peter Schiff Show. Full 13 December newsletter at…
http://www.europac.net/commentaries/they_bravely_chickened_out
You’ve heard of the Golf channel?
This week CNBC will be the FED channel.
FED COULD SET OFF YEAR END FIREWORKS (Reuters)
The possibility that the Federal Reserve could finally
start to trim its extraordinary stimulus for the economy could make this week
an explosive one for financial markets. Though the odds still point to no major
policy change when U.S. central bankers meet December 17-18, most of the recent
domestic economic data suggest the beginning of the end of their massive
bond-buying program is coming sooner than later…"Tapering now would tell
us that the Federal Reserve believes the U.S. expansion is durable and that the
global economy, at a minimum, is less fragile," said David Kelly, chief
global market strategist at JPMorgan Funds.” Story at…http://www.reuters.com/article/2013/12/15/us-economy-global-idUSBRE9BE0FG20131215?feedType=RSS&feedName=businessNews
The rough odds I have seen (based on guesses by
economists) suggest about a 33% chance of Taper in December and then up to 55%
in January and somewhere in the neighborhood of 75% by March.
CHANNEL CORRECTION POINTS TO LARGE MOVE DOWN (MPtrader/MarketWatch)
MPtrader says that the long-term charts suggest the S&P 500 “…is in
the early stages of traversing toward the lower [long-term] channel line…” 25%
lower than the upper trend line. For
analysis and commentary by Mike Paulenoff see…https://www.mptrader.com/scharts/S-P-Weekly-Chart-201312132601.html
MARKET REPORT
Monday, the S&P 500 was up 0.6% to 1787 (rounded).
VIX was up 2% to
16.03. The options boys are taking out some insurance in case the Fed surprises
with a taper announcement. Monday, the S&P 500 was up 0.6% to 1787 (rounded).
FRIDAY’S SHIFT IN MARKET OPINION – POSSIBLE REVERSAL
One business-day after I wrote the correction would continue…that
conclusion is in doubt.
Every news story said the market was up Monday due to the better than expected
Industrial Production numbers. That had
little to do with it since the market had a reversal in one of the measures of internals that I track on Friday.
When I looked at numbers over the weekend the one thing that jumped out
was Friday’s reversal of the trend in new-high/new-low data. The spread was still negative, but it
improved by +176 on Friday when compared to Thursday. Volume also declined, so this indicated a
reduction of fear on Friday and was a positive for the markets especially since
the S&P 500 was about 1% above its 50-day moving average. Given the Friday data, Monday, the computers
said “buy” so we had a strong up day today.
Interestingly, there has not been much of a correction (the market was
only about 2% off the highs as of Thursday), so the market action has not convinced me
to buy. Further, the S&P 500
up-trend over the past 6-months has slowed so the 50-dMA is higher than
normal. Usually the 50-dMA is around
the lower trend line, but not now. It
still looks to me like the index should trend at least to its lower trend line,
because the internals remain mostly negative, even the new-high/new/low data.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing rose to 46%
at the close Monday. (A number below 50%
for the 10-day average is generally bad news for the market.)
The chart of the 10-dMA of breadth still shows lower
highs and lower lows as market breadth continued to remain within
its downward sloping trend lines.
New-highs outpaced new-lows Monday, leaving the spread
(new-hi minus new-low) at +37 (it was minus 55 Friday).
The 10-day moving average of change in the spread was minus
25. In other words, over the last 10-days, on average, the spread has decreased
by 25 each day.
Market Internals switched to neutral on the market because the 10-dMA
of up-volume has climbed to neutral territory.
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.
I need a bigger pullback to get back in. Otherwise I will continue to sit out the
party.
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 has looked too frothy to rush back in…we’ll see if the market will
pullback so I can join the insanity. If
not, cash is (grit my teeth and put on a false smile) fine.
