Tuesday, September 30, 2014

Chicago PMI…Consumer Confidence

CHICAGO PMI (Dow Jones Business News)
“The Chicago Business Barometer, commonly known as the Chicago PMI, fell to 60.5 this month from 64.3 in August. Any reading above 50 indicates expansion.” Story at…

CONSUMER CONFIDENCE (USA Today)
“A closely watched index of consumer confidence tumbled to 86 from 93.4 in August after rising four straight months, the Conference Board said Tuesday. The August reading was the highest since October 2007…’All told, consumers expect economic growth to easing the months ahead,’ [Lynn Franco, the Conference Board's director of economic indicators] said.” Story at…
http://www.usatoday.com/story/money/business/2014/09/30/consumer-confidence-september/16453621/
 
MARKET REPORT
Tuesday, the S&P 500 was down about 0.3% to 1972 (rounded).
VIX was up about 2% to 16.33.
The yield on the 10-year Treasury Note rose slightly to 2.50% at the close.
 
Some of the market internals are hugely negative, while the price of the S&P 500 has only fallen about 2% from its high.  Curiously, price-volume action looks like the S&P 500 is headed up.  Usually, the majority wins (most stocks are going down – they just aren’t in the index) so it appears more likely that the Index will fall from here. With conflicting indicators, perhaps the Index will just test the prior low at 1966 and move up. We’ll see.
 
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of the percentage of stocks advancing (NYSE) fell to 43% at the close Tuesday.  New-lows outpaced New-highs Tuesday.  The spread (new-highs minus new-lows) was minus-150. (It was -133 Monday). The 10-day moving average of change in the spread fell to minus-12. In other words, over the last 10-days, on average, the spread has decreased by 12 each day. Internals switched to neutral today because up-volume increased.

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
Tuesday, the NTSM is HOLD.  Volume was positive, but all other indicators are neutral.
MY INVESTED STOCK POSITION
I made a BUY call on Monday, 18 August 2014 because the charts were looking better; therefore, I upped my invested percentage to 50% invested in stocks on Tuesday 19 August.  The 5-10-20 Timer and Market Internals both gave positive signals on 19 August confirming the previous day’s Buy signal. 50% is Fully invested for me since I am semi-retired.
                            --INDIVIDUAL STOCKS FROM A VALUE HOUND--
ENSCO (ESV): BUY
For my initial discussion see the NTSM blog at:
http://navigatethestockmarket.blogspot.com/2014/05/coppock-curve-says-stock-crash-nowblow.html
ENSCO’s chart doesn’t look good now since it has fallen below prior lows as the oil drillers have not performed well.  On the plus side, dividend is 6%. PE is 8.5 so downside is somewhat limited.
TOO CHEAP TO IGNORE (Forbes)
“Ensco has a strong buy rating according to ValuEngine and is 19.6% undervalued with a one-year price target at $50.25.” – Story at…
http://www.forbes.com/sites/investor/2014/09/22/transocean-and-three-other-energy-stocks-too-cheap-to-ignore/?partner=yahootix
Oil stocks continue to get pummeled.
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