Initial Claims…Durable Goods…I plan to Buy more stocks.

INITIAL CLAIMS CLIMB BY 14,000 (Bloomberg)
“Jobless claims increased by 14,000 to 348,000 in the week ended Feb. 22, exceeding all forecasts in a Bloomberg survey and the highest level in a month, from 334,000 in the prior period…“We still have a fairly constructive view on the labor market,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York…“There have been some weather-related setbacks in hiring, but as it warms up, you’re going to see much better performance in labor market activity.”  Full story at…
http://www.bloomberg.com/news/2014-02-27/jobless-claims-in-u-s-climbed-last-week-to-one-month-high.html

DURABLE GOODS (Reuters)
“Orders for long-lasting manufactured goods excluding transportation unexpectedly rose last month as did a gauge of business spending plans, but that will probably not change views that factory activity is slowing. The Commerce Department said on Thursday durable goods orders excluding transportation rose 1.1 percent, the largest increase since May, after falling 1.9 percent in December…Data such as industrial production and regional factory surveys have suggested that manufacturing hit a soft patch in recent months…Overall durable goods orders fell 1.0 percent last month after plunging 5.3 percent in December.”  Story at…
http://www.reuters.com/article/2014/02/27/us-durable-goods-idUSBREA1Q15Q20140227
“Doug Short looked at Durable Goods adjusted for population and inflation and found that “…the real per-capita demand for durable goods had increased since the trough at the end of the last recession. But new orders remain far below their respective peaks near the turn of the century and earlier. A key driver, or lack thereof, for healthy growth in durable goods orders is growth in household incomes…which are down substantially since the end of the Great Recession.” Doug provides detailed analysis at …
http://advisorperspectives.com/dshort/updates/Durable-Goods-Real-Per-Capita.php

MARKET REPORT

Thursday, the S&P 500 was up 0.5% to 1854 (rounded).  So the Index finally broke above the old high.  Finally there was late day buying, so perhaps the pros are more optimistic after Yellen’s Senate testimony. I didn’t hear much different than we have heard before.

VIX fell about 2% to 14.04 so VIX offered a little bit of optimism.
The yield on the 10-year Treasury Note fell to 2.64%.  Apparently, the bond market is not as optimistic as the stock market.

MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing fell to 60% at the close.  (A number above 50% for the 10-day average is generally good news for the market.)   New-highs outpaced new-lows Thursday, leaving the spread (new-highs minus new-lows) at +113.  (It was +146 Wednesday). The 10-day moving average of change in the spread was +2. In other words, over the last 10-days, on average, the spread has increased by 2 each day. 10-dMA of up-volume is still falling (now only slightly), but I judge internals to be neutral due to falling up-volume.

The internals just missed a positive rating.

Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are usually right, but they are often late.  They are most useful when they diverge from the Index.  In 2013, using these internals alone would have made a 16% return vs. 30% for the S&P 500 (in on Positive out on Negative – no shorting).  Of course, few trend-following systems will do well in an extreme low-volatility, straight-up year like 2013.

 
NTSM
The NTSM system remained HOLD today, Thursday.  The first Sell signal of this cycle was just over 2-weeks ago on 24 January. Sentiment has switched to negative at 78%-bulls.  That is based on the 5-dMA of the amount invested in long/short Rydex-Guggenheim funds that I track. All other NTSM indicators are neutral. 
The 5-10-20 Timer is now positive so if the Market Internals turn up I’ll change the indicator to a NTSM rating to a Buy.

MY INVESTED POSITION

I am about 40% invested in stocks because I upped my stock holdings by 10% on 12 February (S&P 500-1819) based on Market Internal signals. 

It looks to me that the correction is over as the markets seem to have followed the 2013 model of small declines, but no real correction.  Today the index broke thru the prior highs.  Market internals are almost positive.  The 5-10-20 Timer is positive.  Since I am allowed only 3-moves per month in my 401k it makes sense for me to increase my allocation in stocks now rather than waiting until the new month.  Tomorrow I will increase my allocation to fully invested (50% stocks) unless there is a significant deterioration in the market tomorrow; or if there is a big up day that might indicate a reversal. I feel a conservative stock allocation is warranted. The old guide to subtract your age from 100 and invest that percentage in stocks (but not less than 50%) seems like a good plan now.