“Initial claims for unemployment benefits fell by 2,000 to a seasonally adjusted 312,000 in the week ended June 21, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had predicted 310,000 claims for the week. The previous week's figure was revised upward by 2,000 to a seasonally adjusted 314,000.”
http://online.wsj.com/articles/u-s-jobless-claims-edge-down-in-latest-week-1403785941
CMT: There is not enough change in this report to infer much.
CONSUMER SPENDING UP, BUT BELOW FORCAST (Bloomberg)
“Consumer spending in the U.S. grew less than forecast in May as Americans used gains in income to shore up household finances. Purchases, which account for about 70 percent of the economy, climbed 0.2 percent after being little changed in April…“Clearly the consumer is getting a bit squeezed here,” said Nariman Behravesh, chief economist at IHS Inc…”
http://www.bloomberg.com/news/2014-06-26/consumer-spending-in-u-s-increased-less-than-forecast-in-may.html
CMT: One wonders whether the big rebound forecast by economists for the 2nd Quarter will take place. The market may be worried too, based on the reaction in the morning, but as the day progressed there was a good recovery and it actually looks positive for Friday.
MARKET REPORT
Wednesday, the S&P 500 was down 0.1% to 1957 (rounded).
VIX rose about 0.4% to 11.63.
The yield on the 10-year Treasury Note fell to 2.52% at the close. The Bond Ghouls are still not convinced that happy days are here again.
CORRECTION WATCH
RSI declined to a neutral 64 (70 is overbought). The
Percentage of Stocks above their 200-dMA rose to 66% Wednesday; 61% is the
trouble point for that stat. The S&P
500 is 7.3% above the 200-dMA and 10% above the 200-day is the trouble point
for that one. Chart wise, the index can still move up. Sentiment also has some head room before it
turns negative, although sentiment is so high it is hard to be sanguine about
sentiment. All-in-all though, it still
looks like the index has room to move up a bit more, barring unforeseen bad
news.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks
advancing (NYSE) remained 55% at the close Thursday. (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 +125.
(It was +119 Wednesday.) The 10-day moving average of change in the spread rose
to +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 UP today, but Internals remained NEUTRAL on the market because the
new-hi/new-low spread is slipping.
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 analytical model for LONG-TERM MONEY remained
HOLD Thursday. Sentiment rose to 76%-bulls
(5-dMA of {bulls/(bulls+bears)} for funds invested in selected Rydex/Guggenheim
funds at the close on Wednesday. This value was 85%-bulls on 19 May. Sentiment,
Volume & VIX indicators are all neutral. The Price indicator remains
positive because up-moves have been larger than down-moves recently.
I increased my stock allocation to 50% invested in stocks on 26 March because of the NTSM indicators turned positive 24 Mar at the close. 50% in stocks is fully invested for me, given my age (semi-retired) and the risk inherent in today’s stock market. I am watching closely to see if it is time to reduce my long-term stock holdings.
--INDIVIDUAL STOCKS--
ENSCO (ESV): BUY (Earnings announce 28 July)
The chart looks OK with higher lows and it made a higher high on the
1-month chart so I again rate ESV as BUY. It doesn’t hurt that it was upgraded
to Buy on 27 May by The Street.com. For my initial discussion see the NTSM blog at:
