Thursday, April 24, 2014

Initial Jobless Claims Disappoint…Durable Goods Orders Beat…Mom and Pop Return – Another Top Indicator

“The initial claims level increased to 329,000 for the week ending April 19…continuing claims level fell to 2.680 mln for the week ending April 12…In all likelihood, the low claims levels at the beginning of the month were a result of seasonal biases and not a change in layoff trends.”  Story, charts and commentary at…
“New orders for manufactured durable goods in March increased $6.0 billion or 2.6 percent to $234.8 billion, the U.S. Census Bureau announced today. This increase, up two consecutive months, followed a 2.1 percent February increase. Excluding transportation, new orders increased 2.0 percent…[Doug’s comment:]…’In theory the durable goods orders series should be one of the more important indicators of the economy's health. But its volatility and susceptibility to major revisions of the previous monthly data suggest caution in taking the data for any particular month too seriously.’”  Commentary at at…

“Discount brokerages TD Ameritrade and E*Trade Financial both reported sizable trading volume jumps in the first quarter, an indication that retail investors are getting more active. E*Trade reported 33 percent more volume, while TD Ameritrade said it had witnessed a 30 percent rise in activity, according to a Wall Street Journal report.” Story at…
In the past, the return of the retail investor has been at the top.

Thursday, the S&P 500 was UP about 0.2% to 1879 (rounded).
VIX was UP about 0.5% to 13.34.
The yield on the 10-year Treasury Note remained 2.69% at the close.

The Bond Ghouls aren’t sure market problems have ended. 
The S&P 500 has closed in the vicinity of 1880 about 8 to 10 times since 31 December.  The index  has only closed above 1880 3-times and then only about ½%-higher.  It needs to punch higher or the correction will be back.

The 10-day moving average of stocks advancing on the NYSE declined to 55% 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.  The spread (new-highs minus new-lows was +111.  (It was +129 Wednesday.) The 10-day moving average of change in the spread was +4.  In other words, over the last 10-days, on average, the spread has INCREASED by 4 each day. The smoothed 10-dMA of up-volume was falling as of Thursday.  The internals declined to neutral on the market.

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.

The NTSM analytical model for LONG-TERM MONEY remained HOLD Thursday.  Sentiment has fallen to 77%-bulls (5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim funds. This is a very high number, but on a statistical basis Sentiment is now neutral.  The VIX, Price & Volume indicators are all neutral.
I increased my stock allocation to 50% invested in stocks on 26 March because of the NTSM indicators turned positive Monday (24 Mar) at the close.   I am watching closely to see if it is time to reduce my long-term stock holdings.